Semmi annual report 2014 lasko group 27 8 2014 for publication on seonet by David Bezgovšek

Sem mi-annual RE EPORT …………… …………………… ………………… Laško Gro up and Pivo ovarna Lašk ko

2014 4

Semi-annual report 2014 / Contents

CONTENTS INTRODUCTION

ADDRESS BY THE CHAIRMAN OF THE MANAGEMENT BOARD

PRESENTATION OF THE LAŠKO GROUP

PRESENTATION OF THE PARENT COMPANY PIVOVARNA LAŠKO Company Profile Ownership structure of the equity

10 10 11

BUSINESS REPORT

SUMMARY OF THE SEMI-ANNUAL PERFORMANCE Financial ratios Events during the reporting period Subsequent events

13 13 16 27

FINANCIAL POSITION OF THE LAŠKO GROUP Financing in the Laško Group Sale of the investments of the Laško Group

28 28 29

FINANCIAL RISK MANAGEMENT

SALES

INVESTMENTS

EMPLOYEES

FINANCIAL REPORT

STATEMENT OF COMPLIANCE

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE LAŠKO GROUP for the period ended 30 June 2014

Consolidated statement of financial position Consolidated profit or loss account Consolidated statement of changes in equity for the first half of 2014 Consolidated statement of changes in equity for the first half of 2013 Consolidated cash flow statement Consolidated segment reporting Notes to the unaudited consolidated semi-annual financial statements

47 49 50 51 52 53 54

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Contents

UNAUDITED UNCONSOLIDATED FINANCIAL STATEMENTS OF PIVOVARNA LAŠKO for the period ended 30 June 2014

Unconsolidated statement of financial position Unconsolidated income statement Unconsolidated statement of changes in equity for the first half of 2014 Unconsolidated statement of changes in equity for the first half of 2013 Unconsolidated cash flow statement Notes to the unaudited unconsolidated semi-annual financial statements

60 61 62 63 64 65

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Introduction

INTRODUCTION ADDRESS BY THE CHAIRMAN OF THE MANAGEMENT BOARD Dear Shareholders, esteemed Business Partners and Colleagues!

One of the most significant periods The first half of 2014 was one of the most significant periods for the Laško Group in recent years. At the end of April 2014, Pivovarna Laško, Pivovarna Union and Radenska concluded a Restructuring and Standstill Agreement with all eighteen crediting banks, we concluded procedures relating to the sale of assets that will significantly impact the deleveraging of the Laško Group, and succeeded in retaining good current performance and achieving sales growth on our most important markets.

Signing the agreement and significant deleveraging The Restructuring and Standstill Agreement defines important financial restructuring milestones, whereas final maturity of the majority of the companies’ borrowings has been rescheduled to the end of 2016. The Agreement ensures the long-term solvency of the company and serves as a good basis for the long-term stabilisation and generating added value for shareholders.

In the first half of the year we also concluded two incredibly important processes relating to the sale of assets. At the end of June 2014, the process for the sale of a 53% equity stake held by the consortium of sellers in Mercator was concluded. The proceeds of EUR 75.5 million that Pivovarna Laško, Pivovarna Union and Radenska received for their 23.3% share will significantly contribute to the deleveraging of the Laško Group and represents the first significant milestone referred to in the Restructuring and Standstill Agreement. The sales agreement for Birra Peja, Kosovo, was concluded and closed, which will allow the Laško Group to deleverage by EUR 14.75 million - EUR 13 million in June 2014 and EUR 1.75 million by mid-May 2015. Regardless of the sale of the brewery in Kosovo, Laško Group companies will continue to cooperate with this company and will retain their presence on the markets of Kosovo and nearby markets.

Path forward In late June, the General Meeting of Shareholders of Pivovarna Laško was briefed on an important process, which will begin in the second half of 2014 and is expected to be concluded in 2015 - the search for an appropriate investor to perform a capital increase of Pivovarna Laško. Despite the successful divestment and deleveraging of the Laško Group, the level of debt remains above the target level which is comparable to companies in the industry and allows the company to develop its core activity. Therefore, regardless of the pending sales processes, the parent company Pivovarna Laško will need a capital increase. The Management Board intends to implement the

Laško Group and Pivovarna Laško

Semi--annual reporrt 2014 / Intro oduction

sale as a two-levvel compettitive proce ss includin ng a public tender. Wh hen the pro ocess of oncluded an nd the bestt bidder searcching for a partner to perform a capital inccrease is co is seelected, a General Meeting M off the Sharreholders of o Pivovarn na Laško will be convvened to deccide on thee capital inccrease.

Desp pite these significant s business eevents, it sh hould be em mphasised that Laško o Group comp panies reco orded good d operating results fro om currentt operationss. Despite the fact that the local market haas shrunk significanttly due to the severe re crisis, we w have succeeded in reeplacing th he majorityy of quantitties sold on n the Sloveenian mark ket with increeased exporrts. Laško Group G com mpanies selll over 34% of all quan ntities of beeverages sold on foreign n markets. This can oonly be ach hieved thro ough the h high qualityy of our bran nds, which received several quallity awardss also in th he first hallf of 2014. At the presttigious inteernational quality com mpetition Monde M Selection, Lašško Group brands weree awarded ten medalls - two Grrand Gold and seven n gold meddals, whilee at the interrnational quality q assessment orgganised as part of th he AGRA aagriculturall fair in Gorn nja Radgon na, Laško Group braands receivved sevente een medalls, includin ng four gran nd gold and seven gold d. We have recorrded a succcessful firsst half of 2014. We are lookin ng forward d to the signiificant operating even nts in the second hallf of the ye ear, and off course th he most impoortant salees season. I am coonvinced th hat 2014 will be a successfu ul year, signiificantly beetter than reecent years.. mag. Dušan Zo orko,

Chaiirman of th he Managem ment Boardd of Pivovarrna Laško Laškko, 30 July 2014 2

Laško o Group and Pivovarna P Lašško

Semi-annual report 2014 / Introduction

PRESENTATION OF THE LAŠKO GROUP The Laško Group brings together producers of beer, mineral, spring and natural water, soft drinks, spirits and other alcoholic beverages, syrups for beverage production, newspaper and publishing activities, as well as retail and wholesale trade. Ownership and equity shares as at 30 June 2014: PARENT COMPANY

 PIVOVARNA LAŠKO, Slovenia SUBSIDIARIES

 RADENSKA, Radenci, Slovenia 82.131% stake (82.131% + 11.853% = 93.984%) * The ownership of DBS of 600,000 (11.853%) shares of Radenska is also registered with the Central Securities Clearing Corporation (KDD) in addition to the 82.131% stake held by Pivovarna Laško. In substance, this regards a redemption right, whereby under the contract, the voting rights arising from the ownership lie with the temporary seller, that is, Pivovarna Laško, which as at 30 June 2014 had a total of 93.984% of the voting rights.  PIVOVARNA UNION, Ljubljana, Slovenia (98.066% ownership stake)  JADRANSKA PIVOVARA – Split, d. d., Croatia (99.460% ownership stake)  VITAL MESTINJE, Slovenia (96.92% shareholding)  DELO, Ljubljana, Slovenia (100% ownership stake – of that Pivovarna Laško holds a 80.834% stake and Radenska holds a 19.166% stake)  LAŠKO GRUPA, Sarajevo, Bosnia and Herzegovina (100.00% ownership stake – of that Pivovarna Laško holds a 69.22% stake, Radenska holds a 15.39% stake, and Pivovarna Union a 15.39% stake)  FIRMA DEL, Laško, Slovenia (100.00% ownership stake)  LAŠKO GRUPA, Zagreb, Croatia (100.00% ownership stake)

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Introduction

Pivovarna Laško, d. d., Trubarjeva 28, Laško, drafts an unaudited consolidated semiannual report for the controlling entity and the subsidiaries in the Laško Group. The full consolidation method is used in drafting the consolidated financial statements. The consolidated financial statements comprise the financial statements of the controlling entity Pivovarna Laško and its subsidiaries, in which the controlling entity has a controlling interest. As Pivovarna Union sold its stake in the Birra Peja Group, the Birra Peja Group is thus at 30 June 2014 no longer part of the Laško Group through the UNION GROUP. The consolidated statements also comprise the DELO GROUP, which consists of the parent Delo and its subsidiary Izberi, Ljubljana. Due to their material irrelevance, the following companies are not included in the consolidation: Firma Del, Laško, Laško Grupa, Sarajevo, Radenska Miral, Radenci, Radenska, Zagreb and Radenska, Belgrade. ASSOCIATED COMPANIES

 THERMANA, Laško, Slovenia (20.63% ownership stake)  SLOPAK, Ljubljana, Slovenia (29.22% ownership stake)

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Introduction

Organisational structure of the Laško Group as at 30 June 2014

LAŠKO GROUP as at 30 June 2014 Controlling company

PIVOVARNA LAŠKO, d. d. Subsidiary

RADENSKA, d. d. Radenci Ownership: 82.131% Num. of sh. 4,157,327

RADENSKA MIRAL, d. o. o. Radenci Holding: 100%

Subsidiary

PIVOVARNA UNION, d. d. Ljubljana

JADRANSKA PIVOVARA, d. d. Split

Ownership: 98.066%

Ownership: 99.460% Num. of sh. 5,396,932

Num. of sh. 442,388

Subsidiary

VITAL, d. o. o. Mestinje

DELO, d. d. Ljubljana

Holding: 96.92%

Ownership: 100% Num. of sh. 667,464

Pivovarna Laško Ownership in Delo I80.834% Num. of sh. 539,536

Subsidiary

FIRMA DEL, d. o. o. Laško

LAŠKO GRUPA, d. o. o. Zagreb

Holding: 100%

Pivovarna Laško Holding in Laško Grupa Sarajevo I69.22%

Radenska

Radenska Holding in Laško Grupa Sarajevo I15.39%

Subsidiary of Delo:

Holding: 100%

Subsidiary

LAŠKO GRUPA, d. o. o. Sarajevo

Ownership in Delo I19.166% Num. of sh. 127,928

IZBERI, d. o. o. Ljubljana

Subsidiary

Pivovarna Union Holding in Laško Grupa Sarajevo I15.39%

* See the note on page 7 for information on the ownership and voting and management rights relating to Radenska. Laško Group and Pivovarna Laško

Semi-annual report 2014 / Introduction

PRESENTATION OF THE PARENT COMPANY PIVOVARNA LAŠKO Company profile PIVOVARNA LAŠKO, d. d., Trubarjeva 28, 3270 Laško, is registered with the District Court in Celje under the registration no. Srg 95/00673 and under the file no. 1/00171/00 dated September 1995. Abbreviated company name:

PIVOVARNA LAŠKO, d. d.

Organisational form:

public limited company

Share capital: Number of issued shares:

EUR 36,503,305 8,747,652 no par-value shares

Listing of shares: Ticker symbol:

Ljubljana Stock Exchange, stock exchange listing of regular shares PILR

Company registration number: Tax number: Activity code:

5049318 SI90355580 11.050

Type of business and principal activity: BEER PRODUCTION Management Board comprised of five members:

mag. Dušan Zorko, Chairman Marjeta Zevnik Mirjam Hočevar Gorazd Lukman Matej Oset

Supervisory Board:

Goran Brankovič, Chairman Bojan Cizej, Deputy Chairman mag. Dragica Čepin Janez Škrubej Jože Bajuk dr. Peter Groznik

Telephone: Fax: E-mail: Website:

+386 3 734 80 00 +386 3 573 18 17 info@pivo-lasko.si http://www.pivo-lasko.si

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Introduction

Ownership structure of the equity As of 30 June 2014, the share capital of Pivovarna Laško amounts to EUR 36,503,305 and is divided into 8,747,652 no par-value shares, all of which have been paid in full. These are all ordinary and registered shares issued in uncertificated form bearing the PILR and PILH ticker symbols. As at 30 June 2014, the Company had 6,922 shareholders, 1.61% less than as at 30 June 2013. As at 30 June 2014, the ten biggest shareholders possessed a total of 6,154,031 shares or 70.35% of total share capital. Individual shareholders had the following holdings: Ownership structure of the equity as at 30 June 2014 (30 June 2014) DUBT, d. d. Kapitalska družba, d. d. Hypo Alpe-Adria-Bank, AG - fiduciary account Probanka, d. d. GB, d. d. Kranj Skagen Kon-tiki Verdipapirfond NFD1, mešani fleksibilni podsklad - jug Abanka, d. d. Banka Celje, d. d. Banka Koper, d. d. Total - 10 largest shareholders Other minority shareholders Total - all shareholders

no. of shares

in %

position

2,056,738 617,488 615,515

23.512 7.059 7.036

1. 2. 3.

614,565 542,448 499,286 439,557 285,463 252,500 230,471 6,154,031 2,593,621 8,747,652

7.025 6.201 5.708 5.025 3.263 2.886 2.635 70.351 29.649 100.000

4. 5. 6. 7. 8. 9. 10.

As of 30 June 2013, ten of the biggest shareholders possessed a total of 6,154,377 shares or 70.36% of the total share capital, which was 346 shares more than on 30 June 2014.

Shares The shares of Pivovarna Laško with the PILR ticker symbol have been quoted on the regulated securities market of the Ljubljana Stock Exchange since 1 February 2000 as ordinary shares. As of 30 June 2014, the share capital of the Company amounts to EUR 36,503,305 and is divided into 8,747,652 no par-value shares. Also as at 30 June 2014, 8,611,481 shares bearing the PILR symbol and 136,171 shares bearing the PILH symbol were registered in the central register of the Central Securities Clearing Corporation (KDD) in Ljubljana. The Company still has PILH shares from the ownership restructuring procedure reserved for denationalisation beneficiaries. If a decision is issued in favour of a

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Introduction

denationalisation beneficiary, the share changes from a PILH share to a PILR and is then quoted on the regulated securities market. The book value of a PILR share as at 30 June 2014, calculated as the book value of capital divided by the number of shares, amounted to EUR 7.71, 0.9% lower than as at the last day of the previous year, when it stood at EUR 7.78. The market value of one PILR share at 30 June 2014 amounted to EUR 11.78, which is 193.8% more than as at 31 December 2013, when it amounted to EUR 4.01. Number of shares and shareholdings of members of the Management Board and Supervisory Board of Pivovarna Laško in the Company's subscribed capital as at 30 June 2014 (shareholder) mag. Dušan Zorko Marjeta Zevnik Mirjam Hočevar Gorazd Lukman Matej Oset Bojan Cizej mag. Dragica Čepin Total

Membership Chairman of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the SB Member of the SB

No. of shares 3,019

Participation in % 0.0345

2,247

0.0257

2,244

0.0257

1,696

0.0194

2,275

0.0260

3,180 3,413 18,074

0.0364 0.0390 0.2067

The other members of the Supervisory Board were not holders of Pivovarna Laško shares as at 30 June 2014.

Capital increase, authorised and conditional capital On 30 June 2014, the General Meeting of Pivovarna Laško resolved not to increase the share capital of the Company by cash contributions, nor did it decide to allow a conditional or authorised increase in the share capital.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

BUSINESS REPORT SUMMARY OF THE SEMI-ANNUAL PERFORMANCE Financial ratios Performance highlights of the Laško Group (in EUR)

I. - VI. / 2014

I. - VI. / 2013

130,515,275 16,057,945 16,832,540 24,085,561 24,860,156 -8,362,395 7,339,025 6,761,455

129,597,964 14,747,353 15,628,519 23,624,386 24,505,552 -9,029,270 -2,283,080 5,691,351

30 June 2014

31 December 2013

Non-current assets Property, plant and equipment Current assets + deferred and accrued items Equity Non-current liabilities + accrued costs and deferred income Current liabilities + accrued costs and deferred income

268,892,906 155,093,775 144,222,896 66,080,141 134,707,500 212,328,161

284,057,058 170,065,814 170,434,237 58,213,883 31,155,169 365,122,243

Net current assets or liabilities 2 3 Net financial debt

-68,105,265 225,723,294

-194,688,006 235,885,133

Net sales revenues EBIT Normalised EBIT EBITDA Normalised EBITDA Net interest expense1 Net profit or loss Normalised earnings or loss 1

Interest income - interest expense

(in EUR)

(in EUR) Cash flows from operating activities Cash flows from investing Cash flows from financing Net cash flows

Laško Group and Pivovarna Laško

I. - VI. / 2014

I. - VI. / 2013

21,213,400 62,406,733 -78,460,417 5,159,716

17,908,551 2,996,456 -21,488,590 -583,583

Semi-annual report 2014 / Business report

Indicators I. - VI. / 2014

I. - VI. / 2013

Share of normalised EBIT in net sales revenue

12.9 %

12.1 %

Share of normalised EBITDA in net sales revenue Interest coverage4

19.0 % 2.013

18.9 % 1.731

Normalised earnings or loss in net sales revenue Return on equity (ROE)5 Return on assets (ROA)6 Liabilities /equity

5.2 % 12.6 % 1.5 % 5.252

4.4 % 6.8 % 1.1 % 4.819

I. - VI. / 2014

I. - VI. / 2013

45,821,150 5,515,328 5,837,765 7,735,778 8,058,215 -5,329,600 -641,993 -523,064

43,497,126 5,806,377 6,652,120 8,131,233 8,976,976 -5,354,336 -3,742,840 201,715

30 June 2014

31 December 2013

302,906,614 44,919,624 37,322,496 67,436,220 89,704,078 183,088,812

301,383,218 43,937,583 55,677,706 68,078,212 9,013,665 279,969,047

Net current assets or liabilities 2 Net financial debt 3 Net financial debt less investments in

-145,766,316 2,745,239

-224,291,341 3,662,777

subsidiaries4

227,604,081

228,189,002

Normalised EBIT/net interest expense Normalised net earnings or loss / average equity in the period 6 Normalised net earnings or loss / average assets in the period 5

Significant data on the operations of Pivovarna Laško (in EUR) Net sales revenues EBIT Normalised EBIT EBITDA Normalised EBITDA Net interest expense1 Net profit or loss Normalised earnings or loss 1

Interest income - interest expense

(in EUR)

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report 2

Current assets including deferred costs and accrued income - current liabilities including deferred costs and accrued income 3 (Non-current and current financial liabilities) - non-current and current investments + cash) 4 (Non-current and current financial liabilities) - (non-current investments less interests in subsidiary 4 companies + current investments + cash) 2

(in EUR)

I. - VI. / 2014

I. - VI. / 2013

10,518,015 24,923,874 -35,585,496 -143,607

6,373,619 1,553,978 -7,001,737 925,860

I. - VI. / 2014

I. - VI. / 2013

Share of normalised EBIT in net sales revenue

12.7 %

15.3 %

Share of normalised EBIT in net sales revenue Interest coverage5

17.6 % 1.095

20.6 % 1.242

Normalised earnings or loss in net sales revenue Return on equity (ROE)6 Return on assets (ROA)7 Liabilities /equity

-1.1 % -0.8 % -0.1 % 4.045

0.5 % 0.2 % 0.1 % 4.203

Cash flows from operating activities Cash flows from investing Cash flows from financing Net cash flows

Indicators

Normalised EBIT/net interest expense Normalised net earnings or loss / average equity in the period 7 Normalised net earnings or loss / average assets in the period 6

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

Events during the reporting period 1. Signing of the Restructuring and Standstill Agreement At the end of April 2014, Pivovarna Laško, Pivovarna Union and Radenska signed a Restructuring and Standstill Agreement with all of the eighteen creditor banks. The Agreement defines important financial restructuring milestones, whereas final maturity of the majority of the companies’ borrowings has been rescheduled to the end of 2016. The project of determining the concept of operational and financial restructuring of the companies continued over the entire 2013 period with close participation of all companies involved, creditors, and consultants. The aim of the project was to define an agreement that will on the one hand ensure the financial stability of the Laško Group through the long-term reprogramming of its borrowings and through deleveraging the Group to a sustainable level of debt, and on the other hand, to ensure fulfilment of creditors' expectations for rapid deleveraging and simultaneous maximising of the value for the owners. This will ensure the Laško Group of companies a sustainable development of quality brands and preservation of jobs. A total of seventeen various scenarios of the Group's restructuring plan were prepared and following their analysis from the financial, fiscal and legal points of view, the concept which provided the basis for the signed Agreement was dully selected. The Agreement regulates the Group's commitments to creditors until the end of 2016. In addition to deleveraging through repayments to creditors from the cash flow from the Group's principal activity, the Agreement sets important deleveraging milestones from the consortium sale of Mercator and processes for disposal of Radenska, Birra Peja and Delo, all of which began in 2013. One of the key milestones for all stakeholders, including creditors, the Company and the owners, is the capital increase of Pivovarna Laško. After a transparent process of finding the investor, the capital increase will be discussed by the owners at the General Meeting of Pivovarna Laško. The first significant milestone, which has already been achieved, is the repayment of borrowings with the proceeds from sale of Mercator by the end of July 2014. The next milestone is the end of 2014, when repayment of borrowings is planned from the consideration received for disposal of investments in auxiliary activities. The third key milestone is deleveraging from additional injection of capital, planned for mid-2015.

2. Closing the sale of the shares of Mercator On 14 June 2013, the consortium of sellers of the stake in Poslovni sistem Mercator (hereinafter: Mercator) comprised of Pivovarna Laško, Pivovarna Union, Radenska, NLB, Nova KBM, Gorenjska banka, Prvi faktor – Faktoring, Banka Koper, Hypo AlpeAdria Bank, NFD, Banka Celje, and NFD holding (hereinafter: consortium of sellers) concluded with Agrokor, d. d. (hereinafter: Agrokor) an Agreement on the sale and

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

purchase of a total 53% share in Mercator (hereinafter: SPA); an Annex to the SPA was concluded on 28 February 2014. The signing of the SPA was the result of an extensive procedure led by the London team of international investment bank ING Bank N.V. The process was performed in compliance with international good practice with the aim of involving all potential investors. Transparency of the process as well as maximising benefits for all Mercator's stakeholders were ensured. Closing of the transaction, resulting in the proceeds being paid, was tied to several conditions, including obtaining the relevant regulatory approvals, the rescheduling of Mercator's debt, and Laško Group companies concluding an Escrow Agreement with the crediting banks with collateral on MELR shares. On 27 June 2014, the process for the sale of the 53% equity stake held by the consortium of sellers in Mercator was concluded. Agrokor paid a total of EUR 172 million to the consortium of sellers for their 53% stake in Mercator. The proceeds of EUR 75.5 million which Pivovarna Laško, Pivovarna Union and Radenska received for their 23.3% share will significantly contribute to the deleveraging of the Laško Group and represents the first significant milestone referred to in the Restructuring and Standstill Agreement concluded between Pivovarna Laško, Pivovarna Union and Radenska with the crediting banks in late April 2014.

3. Closing of the sale of the investment in Birra Peja The sale of Birra Peja began in October 2013 based on the project of operational and financial restructuring of the Laško Group. Negotiations with the potential buyer were successfully closed in June 2014. On 11 June 2014, the Supervisory Board of Pivovarna Union consented to the Management Board beginning implementation of the sales agreement on the sale of 14,620 shares in Birra Peja, Peć, Kovoso, representing a 57.63% stake in the company, as well as the claim of Pivovarna Union to Birra Peja, Peć, Kosovo. The contractually-agreed proceeds amount to EUR 14.75 million. On 16 July 2014, the transaction was successfully concluded by the satisfaction of the suspensive conditions agreed in the sales agreement and the transfer of proceeds for the share and claim amounting to EUR 13 million. The remaining claim of EUR 1.75 million, which is collateralised and bears interest, is expected to be paid within one year. In accordance with the Restructuring and Standstill Agreement, the proceeds were used to effect pro-rata disbursement to the crediting banks of Pivovarna Union. This sale represents the successful completion of one of the financial restructuring milestones of the Laško Group as defined in the Restructuring and Standstill Agreement concluded with the crediting banks.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

4. Closing the sale of the shares of Večer Activities relating to the sale of our 79.25% stake in Večer, which began already in 2010, continued in 2013 and 2014. In January 2013, the CPO prolonged the deadline for the sale of the company to 31 March 2013, which was in March again prolonged to 31 July 2013. For the second time, a sales agreement was concluded with a potential buyer containing several suspensive conditions, which however remained unfulfilled by the cut-off date. As a result, negotiations with thus buyer fell through in early April 2013. Delo continued negotiations aiming at the sale of ČZP Večer with other potential buyers. In June, a two-month exclusivity agreement was signed with one of the buyers who in the past expressed its interest in acquiring Večer. The buyer performed a due diligence review but decided not to continue the procedure. On 26 July 2013 the Delo publishers addressed a request to the Republic of Slovenia Agency for Protection of Competition for another extension of the deadline for the sale of 79.24% share in Večer; however, the request was rejected. A public auction for the sale of a block of shares of ČZP Večer was held on 28 February 2014 at 12 noon at the premises of Delo. The Committee determined that the security required for participation in the auction had not been paid within the set deadlines. Consequently, the auction was unsuccessful. Delo continued activities aimed at selling the shares in ČZP Večer as soon as possible. In May 2014, a new sales mandate was provided to KF Finance, Ljubljana, which began actively searching for potential buyers. After lengthy negotiations, the best bid was selected among those received. On 10 July 2014, the sales agreement for the stake in ČZP Večer, Maribor, was concluded. The agreement contains the suspensive condition that the Competition Protection Agency provides its consent. The buyer has already acquired the prior consent of the Ministry of Culture.

5. Sale of investments of the subsidiaries of Pivovarna Laško Processes relating to the sale of investments of the subsidiaries of Pivovarna Laško, Delo, Radenska and Jadranska pivovara - Split are described in the chapter FINANCIAL POSITION OF THE LAŠKO GROUP, under the heading Sale of Laško Group investments.

6. Beginning of the capital increase process of Pivovarna Laško In July 2013, the Management Board of Pivovarna Laško determined in cooperation with the crediting banks a general debt restructuring framework, which was included in the Restructuring and Standstill Agreement signed on 30 April 2014. The Restructuring and Standstill Agreement sets important deleveraging milestones from the consortium sale of Mercator, which was successfully closed on 27 June 2014, and processes for disposal of Radenska, Birra Peja and Delo. The last, but one of the key milestones, is searching for an investor to provide a capital increase in Pivovarna Laško.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

In order to ensure the expert and transparent sale of our stakes in Birra Peja, Radenska and Delo, and search for the relevant investors, the Laško Group has instructed the UniCredit bank to act on its behalf. In accordance with the Restructuring and Standstill Agreement, with the help of UniCredit, the Laško Group is beginning to look for an investor interested in taking a significant interest in Pivovarna Laško (by providing a capital increase in exchange for newly issued shares of Pivovarna Laško). The exact capital increase and share expected or to be acquired by the investor has not yet been determined. We assume investors will be interested in acquiring a controlling interest in Pivovarna Laško by purchasing new shares issued in the capital increase and by offering to purchase other already issued shares. Together with its advisers, Pivovarna Laško began looking for an investor in July 2014 by issuing a Teaser. When the process of searching for an investor to perform a capital increase is concluded and the best bidder is selected, a General Meeting of the Shareholders of Pivovarna Laško will be convened to decide on the capital increase. Shareholders will be informed of the capital increase process in accordance with the law and stock exchange regulations.

7. Settlement claims of Pivovarna Union and Radenska in accordance with Article 542 of the Companies Act (ZGD-1) On 23 April 2014, Pivovarna Laško received the letters entitled "Settlement claim pursuant to paragraph 1 of Article 542 of the Companies Act", both dated 22 April 2014 and sent by Pivovarna Union and Radenska. In the letters, the aforementioned companies inform Pivovarna Laško of the unaudited amounts of their settlement claims aimed to cover the losses of both companies generated during the contractual group with Pivovarna Laško as the controlling entity. The unaudited amount of the claim of Pivovarna Union for the period from 11 April to 26 April 2012 amounts to EUR 0 (nil), while the unaudited amount of the claim of Radenska for the period from 6 February to 26 April 2012 amounts to EUR 1,044,183.99. An overview of the calculations was attached to the letters. On 23 April 2014, Pivovarna Laško replied to the letters of Pivovarna Union and Radenska, informing both companies that it has been informed of their claims. At the same time, both companies were requested to provide confirmation of the amounts by auditors. In light of the aforementioned, provisions of EUR 1,044,183.99 have been disclosed in the financial statements of Pivovarna Laško for the financial year ended 31 December 2013.

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8. Compensatory actions against Atka-Prima / Boško Šrot In early 2011, compensatory actions were filed at the relevant courts against the defendants Atka-Prima and Boško Šrot, demanding the defendants pay damages to the plaintiffs relating to the damages incurred by the plaintiffs as a result of transactions effected in 2008 and 2009. The following actions were filed: by Pivovarna Laško on 12 January 2011 for the payment of EUR 13,336,488.76 plus costs and interest; by Pivovarna Union for the payment of EUR 51,662,307.74 plus costs and interest; by Radenska, Radenci for the payment of EUR 46,238,893.69 plus costs and interest, by Delo for the payment of EUR 8,003,311.06 plus costs and interest, and by Fructal for the payment of EUR 10,784,720.85 plus costs and interest (the latter were all filed on 15 February 2011). These proceedings are all pending. On 14 July 2014, Pivovarna Laško received the interim judgement of the Celje District Court in the industrial dispute between Pivovarna Laško as the plaintiff and AtkaPrima, Celje and Boško Šrot as defendants for the payment of EUR 13,336,488.76 plus costs and interest. The court decided that the claim of the plaintiff for damages arising from the transactions or loan agreements concluded in 2009 by the plaintiff and Infond Holding and the plaintiff and Center naložbe, and the sales agreement concluded in 2008 for the purchase of shares in Thermana between Infond Holding as the seller and the plaintiff Pivovarna Laško as the buyer, is justified. At the same time, the court halted the proceedings for the payment made on 24 September 2013 of EUR 89,382.56 from the bankruptcy estate of Infond Holding, d. d. – v stečaju and the payment made on 30 December 2013 of EUR 410,236.03 from the bankruptcy estate of Center naložbe, d. d. - v stečaju. The interim judgement and decision are not yet final.

9. Compensatory actions against the Republic of Slovenia, the CPO and the then director of the CPO - now the CPA On 14 September 2012, Pivovarna Laško, Pivovarna Union and Radenska, Radenci (hereinafter referred to as: the Laško Group companies) filed a compensatory action against the Republic of Slovenia (the Competition Protection Office; hereinafter referred to as: CPO) and the director of the CPO. In the opinion of the Laško Group companies, the reason for the action was the unlawful prevention of the sale of the shares of Mercator owned by the Laško Group companies by the CPO in 2011. Because of the decision of 26 April 2011 taken by CPO, the Laško Group companies were not able to accept the binding offer of Agrokor for the purchase of the shares of Mercator owned by the Laško Group companies in 2011 since the above-mentioned decision prevented the Laško Group companies from disposing of their shares of Mercator. The Laško Group companies believe that the CPO unlawfully prevented the conclusion of the aforementioned transaction with Agrokor, which consequently resulted in damages arising to the Laško Group companies of a total EUR 59.2 million up to the date the action was filed (of that, Pivovarna Laško incurred damages of EUR 21,877,385.84 plus costs and interest, Pivovarna Union damages of EUR 31,322,586.77 plus costs and interest, and Radenska, Radenci damages of EUR 6,157,355.78 plus costs and interest).

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On 14 October 2013 we received the judgement of the Supreme Court of the Republic of Slovenia ruling the aforementioned CPO decision dated 26 April 2011 unlawful. The judgement of the Supreme Court was forwarded to the court dealing with the plaintiffs' actions.

10. Infond Holding Bankruptcy proceedings were instigated against the debtor Infond Holding at the end of 2009. In the bankruptcy proceedings, Laško Group companies have reported the following claims: Pivovarna Laško: EUR 1,892,319.26, Pivovarna Union: EUR 28,107,482.28, Radenska: EUR 17,062,078.14 and Delo: EUR 6,771,147.94, amounting to a total of EUR 53,833,027.62. The bankruptcy proceedings are still pending. The first interim division of the bankruptcy estate was performed on 24 September 2013. Pivovarna Laško received EUR 89,382.56, Pivovarna Union EUR 1,485,332.23, Radenska EUR 805,916.99 and Delo EUR 319,831.10. The bankruptcy proceedings are still pending.

11. Center naložbe Bankruptcy proceedings were instigated against the debtor Center naložbe at the end of 2009. In the bankruptcy proceedings, Laško Group companies have reported the following claims: Pivovarna Laško: EUR 6,487,493.35, Pivovarna Union: EUR 19,991,859.46, Radenska: EUR 26,414,066.45 and Delo: EUR 547,784.42, amounting to a total of EUR 53,441,203.68. The first interim division of the bankruptcy estate was performed on 30 December 2013. Pivovarna Laško received EUR 410,236.03, Pivovarna Union EUR 1,695,898.66, Radenska EUR 1,670,291.01 and Delo EUR 34,639.10. The bankruptcy proceedings are still pending.

12. Action of minority shareholders in Jadranska pivovara – Split On 4 April 2012, Jadranska pivovara - Split received the action of 28 minority shareholders challenging the resolution of the General Meeting of Jadranska pivovara adopted on 24 February 2012 on the exclusion of the minority shareholders. On 13 February 2013, Jadranska pivovara received the judgement of the court of first instance recognising the claim of two shareholders and finding the resolution on the exclusion of the minority shareholders void. Jadranska pivovara appealed the judgement. On 10 July 2013, Jadranska pivovara received the judgement of the Zagreb High Court annulling the decision of the court of first instance and deciding the case should be reexamined. On 3 December 2013, Jadranska pivovara received the judgement of the court of first instance, which again recognised the claim of the two shareholders and found the resolution on the exclusion of the minority shareholders void. Jadranska pivovara appealed the judgement.

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13. Denationalisation claims at Radenska, Radenci The proceedings are taking place before the Gornja Radgona Administrative Unit in compliance with the Denationalisation Act and in the non-contentious proceedings before the District Court in Novo mesto pursuant to the Enforcement and Criminal Actions Act. The beneficiaries are demanding restitution of their shares in property, company, trademarks and mineral springs that were nationalised, as well as the payment of damages. The Gornja Radgona Administrative Unit issued a decision on 27 June 2012, which rejected the request for the privatisation of the nationalised company Zdravilišče Slatina Radenci, Höhn and Comp., public trading company in Radenci with a 48% stake owned by Wilhelmina Höhn Šarič. With the supplementary decision issued on 31 August 2012 the Zdravilišče Slatina Radenci, Höhn and Comp., public trading company is corrected and renamed Kuranstalt Sauerbrun Radein AG. The claim was lodged by the legal successor dr. Rudolf Höhn Šarič on 4 May 1993. In the appeal proceedings, the Ministry of Economic Development and technology on 25 February 2013 rejected the appeal against the decision of the Gornja Radgona Administrative Unit as unjustified. The beneficiary lodged a lawsuit and the proceedings continue before the Administrative Court of the Republic of Slovenia. Non-contentious proceedings for the return of property pursuant to the Enforcement and Criminal Actions Act are taking place before the District Court in Novo mesto. The motion was filed on 20 December 2010 for the benefit of the beneficiaries, the grandchildren of dr. Anton Šarič. The District Court in Novo mesto issued an order, which was received on 19 June 2013, dismissing the request for the return of nationalised property. An appeal was filed with the Ljubljana High Court, which was rejected and the decision of the Novo mesto District Court upheld. The latter also rejected the return of the nationalised property. This matter is thus res iudicata as concerns regular legal remedies.

14. Action of Perutnina Ptuj against Pivovarna Laško The plaintiff filed a claim against Pivovarna Laško on 31 December 2010 at the District Court of Celje demanding payment of EUR 10,116,488.71 inclusive of the legally prescribed default interest. The plaintiff justified its claim by stating that the legal representative of Pivovarna Laško signed a comfort letter on 10 January 2009 and thus allegedly committed to fulfil the liability of Perutnina Ptuj to Poslovni sistem Mercator on account of loan contracts. The proceedings are pending.

15. Enforcement proceedings of NKBM against Pivovarna Laško Pursuant to the agreement on the pledge of book-entry securities concluded on 5 June 2009 between Nova kreditna banka Maribor (NKBM) as the creditor, Center naložbe as the debtor and Pivovarna Laško as the lienor, Pivovarna Laško pledged to NKBM 345,304 shares of Radenska (ticker symbol: RARG) as collateral for a loan raised by Center naložbe with NKBM. The aforementioned agreement on the pledge of book-

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entry securities was signed by the former director Boško Šrot on behalf of Pivovarna Laško. On 22 November 2011, Pivovarna Laško received the judgement of the Maribor District Court allowing the enforcement on the pledged shares to repay the claim in the amount of EUR 7,349,552.52 plus costs and interest from 29 July 2011 in the commercial dispute between NKBM as the plaintiff and Pivovarna Laško as the defendant. The court thus allowed the enforcement against the 345,304 RARG pledged shares, ruling that the defendant Pivovarna Laško is obligated to suffer the sale of these shares and repay the claim from the proceeds of the sale. The judgement became final and enforceable on 8 December 2011. Pursuant to the aforementioned judgement and the enforcement motion of NKBM, on 22 December 2011 the court issued an enforcement order whereby the court approved the proposed enforcement against the pledged RARG shares by selling the shares and repaying the creditor from the proceeds. So far the RARG shares have not been sold in the enforcement procedure. NKBM proposed deferred enforcement and accordingly on 28 October 2013 the court ruled for the enforcement to be postponed until 1 October 2014. On 17 June 2014, Pivovarna Laško received the decision of the Celje District Court allowing the intervention of the new creditor in the enforcement proceedings. The Bank Assets Management Company (Družba za upravljanje terjatev bank, Ljubljana DUTB) took the place of the original creditor Nova KBM, Maribor, as the disposal of the underlying claim has resulted in the automatic transfer of the lien from the former to the current creditor.

16. The action of MIP against Pivovarna Laško On 21 March 2013 we received from the Celje District Court the action of MIP, Gornji Vakuf, Uskoplje, for the payment of EUR 1,135,481.43. In the action, the plaintiff demands the payment of damages for loss of income of EUR 1,085,481.43 alleged to have arisen as a result of the unlawful withdrawal of Pivovarna Laško from the sales agreement, as well as damages for the loss of reputation in the amount of EUR 50,000.00. On 22 April 2013 the Group issued its response stating that the plaintiff's claim was unfounded. The court of first instance has not ruled on this matter yet.

17. The action Pivovarna Laško against MIP On 25 September 2012, Pivovarna Laško filed an action against MIP demanding payment of EUR 200,975.51 plus costs and interest due to the failure to pay for the goods that Pivovarna Laško sold and supplied to the defendant, as well as the payment of EUR 245,316.75 plus costs and interest due to packaging not returned, for a total of EUR 446,292.26 plus costs and interest. On 23 April 2013 we received the reply of the defendant stating that the claim of Pivovarna Laško is unjustified. The court of first instance has not delivered its judgement yet.

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18. CEN ADRIA, d. o. o. – v stečaju, Matulji (Croatia) In 2006 Pivovarna Laško filed an application for enforcement against Cen Adria, Matulji, demanding payment of outstanding invoices totalling kn 857,292.53 (euro equivalent of 114,764.73) inclusive of the legally prescribed default interest. Cen Adria appealed against the enforcement ruling and currently the case is proceeding in the same way as in the case of an appeal against a payment order in contentious proceedings. In 2006, during the above proceedings, Cen Adria filed a counter action against Pivovarna Laško and Jadranska pivovara - Split, Vranjic, demanding payment of damages totalling kn 25.000.000,00 (euro equivalent of approx. 3,346,720.21), which Cen Adria allegedly incurred due to the early termination of the Business Cooperation Agreement (Ugovor o poslovnoj suradnji). In 2012, bankruptcy proceedings were instigated against Cen Adria. In the case of Pivovarna Laško against Cen Adria, on 8 November 2013 Pivovarna Laško received the judgement of the court of first instance awarding Pivovarna Laško the total amount of kn 1,688,990.71 (EUR 221,361.82). Cen Adria appealed the judgement.

19. Non-litigious proceedings for the judicial verification of monetary compensation The applicants, namely Skandij (384 PULG shares; amount at issue: EUR 211,084.80), Enlux (22 PULG shares; amount at issue: EUR 12,093.40), Marko Potočnik (118 PULG shares; amount at issue: EUR 64,864.60 and 1451 RARG shares; amount at issue: EUR 30,819.24), BPH (169 PULG shares; amount at issue: EUR 3,589.56), Sonja Slatnar (2,063 RARG shares; amount at issue: EUR 39,197.00 and 50 RARG shares; amount at issue: EUR 24,344.00), Javna razsvetljava, (22 PULG shares; amount at issue: EUR 12,093.40), Mif Invest (50 PULG shares; amount at issue: EUR 24,344.00), and Nina Pintar (100 PULG shares, amount at issue: EUR 44,700.00) filed a request for the judicial verification of monetary compensation paid for the shares of Pivovarna Union and the shares of Radenska against Pivovarna Laško as the defendant. The applicants request the court defines appropriate compensation for the purchase of all PULG and RARG shares owned by the applicants, while some applicants also demand that Pivovarna Laško as the main shareholder be required to purchase their PULG and/or RARG shares and conclude the relevant sales agreement. In our replies to the applications we objected to them in full. The cases of Enlux, Skandij, Marko Potočnik, Javna razsvetljava, BPH, Mif Invest and Sonja Slatnar are now final. Pivovarna Laško has purchased the shares of the aforementioned applicants.

20. Criminal investigation ref. no. KP 53791/2010 On 9 March 2012, Pivovarna Laško received the decision of the Ljubljana High Court allowing, pursuant to the appeal of the district state prosecutor, the criminal investigation which the Ljubljana District Court had already suspended on 3 June 2011. These criminal proceedings are being conducted against Marko Pogačnik, Tomaž

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Toplak, Boško Šrot, Igor Bavčar, Pivovarna Laško and Istrabenz as the suspects. Marko Pogačnik and Tomaž Toplak are suspected of abuse of office pursuant to Article 244 of the CC, Igor Bavčar and Boško Šrot are suspected of fraud pursuant to Article 217 of the CC in conjunction with Article 25 of the CC, while the legal entities are suspected of fraud pursuant to Article 217 of the CC in conjunction with Article 25 of the CC on account of the alleged actions of Boško Šrot and Igor Bavčar. In the case of Pivovarna Laško, the purchase of Mercator shares from SOD on 30 August 2005 is at issue. The investigation is still pending.

21. Criminal proceedings ref. no. X K 59294/2010 These criminal proceedings refer to two groups of crimes - on the one hand to actions related to the conclusion of loan agreements with Infond Holding and Center naložbe, and on the other hand to actions related to the sale of Istrabenz shares (ticker symbol: ITBG). Initially the proceedings were merged; however, now the court has ordered the proceedings be separated, namely against Boško Šrot as the defendant and Igor Bavčar as the co-defendant for crimes according to Article 240/I of the Criminal Code (CC). On 7 March 2013, Pivovarna Laško brought a claim for damages against Boško Šrot, Igor Bavčar and the other defendants due to crimes relating to the sale of a block of ITBG shares in 2007. The claim for damages demands repayment of lost profit of EUR 25,490,616.16, plus statutory default interest due to the sale of a block of ITBG shares at an excessively low price. On 19 July 2013, the court of first instance issued its guilty verdict, while Pivovarna Laško's claim for damages was referred to the civil court. The criminal case became final on 14 July 2014.

22. Criminal proceedings ref. no. X K 6155/2013 On 29 November 2013, we received notification of the Ljubljana District Court concerning the pre-trial hearing in the criminal proceedings against Boško Šrot, Matjaž Rutar, Vesna Rosenfeld and the legal entity Atka-Prima as suspects of crimes according to 244/II of the Criminal Code, and others. On 17 January 2014 we informed the court of the course of the claims against Boško Šrot and the legal entity Atka-Prima for damages, and that we would not claim damages in the criminal proceedings due to the fact that claims for damages had already been lodged against Boško Šrot and the legal entity Atka-Prima. On 24 February 2014, we lodged claims for damages against Vesna Rosenfeld (Pivovarna Union: EUR 23.2 million) and Matjaž Rutar (Pivovarna Laško EUR 2.3 million, Pivovarna Union EUR 36.8 million, Delo EUR 8.9 million, Radenska EUR 2.4 million).

23. Filing criminal charges On 25 October 2013, Pivovarna Laško filed criminal charges against the former director of Pivovarna Laško, Boško Šrot. Pivovarna Laško believes that reasons exist to suspect that the actions of the former director Boško Šrot, who pledged 345,304 RARG shares with NKBM pursuant to the pledge agreement of book-entry securities dated 5 June 2009, constitute an abuse of office or trust in an economic activity, a crime

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referred to in Article 240 of the Criminal Code (CC). The amount of damages Pivovarna Laško will incur as a result of this damaging transaction cannot be assessed at this moment in time (the actual amount of damages will be known when the shares are sold in the enforcement proceedings of NKBM against Pivovarna Laško - see Enforcement of NKBM against Pivovarna Laško); thus Pivovarna Laško as the legal entity incurring damage will subsequently file a claim for damages.

24. General Meeting of Shareholders of Pivovarna Laško On 30 June 2014, the 22nd General Meeting of Shareholders of Pivovarna Laško was held. The General Meeting was briefed on the audited Annual Report for 2013 and the Report of the Supervisory Board on its verification of the Annual Report, on the cover of net loss, on the remuneration of the Management and Supervisory Board members and granted discharge to the Management Board and the Supervisory Board. The General Meeting appointed Mr Janez Škrubej as new member of the Supervisory Board (capital representative) from 30 June 2014 to 31 August 2017. The General Meeting appointed Ernst & Young as the auditor for 2014. The General Meeting was also briefed on the signing of the Restructuring and Standstill Agreement and the beginning of the search for an investor. The resolutions of the General Meting were published on the SEOnet portal and on the Company's website www.pivo-lasko.si on 30 June 2014. The minutes of the General Meeting and appendices thereto are available on the website of AJPES (Business register of Slovenia).

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Subsequent events 1. Convocation of the General Meeting of Shareholders of Pivovarna Union Convocation of the General Meeting of Shareholders of Pivovarna Union was published in the Delo newspaper on 25 July 2014. The General Meeting has been convened for 27 August 2014. The General Meeting will be briefed on the audited Annual Report of the Union Group and Pivovarna Union for 2013, the Report of the Supervisory Board on its verification of the Annual Report, and the Report of the Supervisory Board on its verification of the Management Board's report on transactions with related parties. The General Meeting will decide on using the distributable profit, which amounts to EUR 2,255,570.00 as at 31 December 2013, to cover dividend payments to the shareholders of EUR 5 per share. The General Meeting will also decide whether to grant discharge to the Company's Management and Supervisory Board for 2013. The General Meeting will appoint a new member of the Supervisory Board. The Supervisory Board proposes that the General Meeting appoint Goran Brankovič as a member of the Supervisory Board for a term of office from 27 August 2014 to 22 June 2015 inclusive. The General Meeting will be proposed to appoint the audit firm Ernst & Young, Ljubljana as the auditor of the company's 2014 financial statements.

2. Convocation of the General Meeting of Shareholders of Radenska Convocation of the General Meeting of Shareholders of Radenska was published in the Delo newspaper on 28 July 2014. The General Meeting has been convened for 28 August 2014. The General Meeting will be briefed on the audited Annual Report of Radenska for 2013, the Report of the Supervisory Board on its verification of the 2013 Annual Report, and the Report of the Supervisory Board on its verification of the Management Board's report on transactions with related parties. The General Meeting will also be briefed on covering the net loss incurred in the 2013 financial year of EUR 3,685,485.71, which the Management Board has already covered by the time it drafted the annual report. The General Meeting will also be briefed on the fact that the financial statements as at 1 January 2012 and 31 December 2012 have been adjusted. Due to these adjustments, the net loss for previous periods amounts to EUR 5,066,206.86, which the Management Board has already covered by the time it drafted the annual report. The General Meeting will also decide whether to grant discharge to the Management and Supervisory Board for 2013. The General Meeting will be proposed to appoint the audit firm Ernst & Young, Ljubljana as the auditor of the company's 2014 financial statements. The General Meeting will also be briefed on the fact that the Workers' Council appointed Frank Lipičar and Dominik Omar as members of the Supervisory Board (labour representatives) for a term of office of 4 years, which began on 9 November 2013.

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Semi-annual report 2014 / Business report

FINANCIAL POSITION OF THE LAŠKO GROUP Financing in the Laško Group As usual, due to seasonality that is characteristic of the beer-making industry, we have encountered difficulties relating to current liquidity. The first four months of the years are usually the most difficult as sales are as a rule lower due to the seasonal effect. The payment discipline of our major customers, who account for over 70% of our total revenue, is also worse in these months. On average, our claims are settled in 75 days. Until 30 April 2014, the Group had commitments due to banks according to loan agreements stemming from the restructuring of loan liabilities concluded on 29 July 2013 by 30 April 2014. On 30 April 2014, Pivovarna Laško, Pivovarna Union and Radenska signed a Restructuring and Standstill Agreement with all of the eighteen creditor banks. The Agreement defines important financial restructuring milestones, whereas final maturity of the majority of the companies’ borrowings has been rescheduled to the end of 2016. The Agreement regulates the Group's commitments to creditors until the end of 2016. In addition to deleveraging through repayments to creditors from the cash flow from the Group's principal activity, the Agreement sets important deleveraging milestones from the consortium sale of Mercator and processes for disposal of Radenska, Birra Peja and Delo, all of which began in 2013. One of the key milestones for all stakeholders, including creditors, the Company and the owners, is the capital increase of Pivovarna Laško. After a transparent process of finding the investor, the capital increase will be discussed by the owners at the General Meeting of Pivovarna Laško. The first significant milestone was repayment of borrowings with the proceeds from the sale of Mercator by the end of July 2014, which was fulfilled on 27 June 2014. The proceeds of EUR 75.5 million which Pivovarna Laško, Pivovarna Union and Radenska received for their 23.3% share significantly contributed to the deleveraging of the Laško Group and represented the first significant milestone referred to in the Restructuring and Standstill Agreement. The next milestone is the end of 2014, when repayment of borrowings is planned from the consideration received for disposal of investments in auxiliary activities. On 16 July 2014, the sale of the investment in Birra Peja owned by Pivovarna Union was finally closed. The contractually-agreed proceeds amount to EUR 14.75 million. In accordance with the sales agreement, most of the proceeds - EUR 13 million - were received, which were distributed pro-rata among the crediting banks of Pivovarna Union in accordance with the Standstill and Restructuring Agreement. The third key milestone is deleveraging from additional injection of capital in mid2015.

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Semi-annual report 2014 / Business report

In the first half of the year, the Laško Group has reduced its exposure to banks by repaying net principal of EUR 64.4 million, of which EUR 28.1 million was repaid by Pivovarna Laško, EUR 29.1 million by Pivovarna Union, EUR 5.8 million by Radenska (including changes to the utilisation of the approved revolving loan), with the difference being repaid by the remaining Laško Group companies. The intra-Group debt remains at the same level as at the end of 2013. In the first half of the year, the Laško Group recorded EUR 8.4 million of financial expenses from financial liabilities due to banks and recorded an EBITDA of EUR 21.5 million. Most financial expenses from financial liabilities due to banks were recorded by Pivovarna Laško, namely EUR 5.3 million. This resulted in an EBITDA of EUR 7.7 million, meaning that the EBITDA generated in the second quarter of the year is sufficient to cover all financial expenses from financial liabilities due to banks.

Sale of the investments of the Laško Group In 2014, the Laško Group continues activities related to the divestment of financial investments and other assets not necessary for its operations. Pursuant to the operational and financial restructuring plan of the Laško Group, in order to deleverage the Group to an acceptable level and ensure its widely recognised brands and jobs are retained, in addition to continuing divestment processes already begun, we began selling investments that comprise our core activity - namely our investments in Radenska and Birra Peja - in September 2013. The disposals process is being managed by the M&A advisers, UniCredit Banka Slovenije.

Sale of the shares of Mercator This transaction closed on 27 June 2014. For more information, see the chapter entitled Events during the reporting period.

Sale of the shares of Večer On 10 July 2014, the sales agreement for the stake in ČZP Večer, Maribor, was concluded. For more information, see the chapter entitled Events during the reporting period.

Sale of the shares of Birra Peja, Peć This transaction closed on 16 July 2014. For more information, see the chapter entitled Events during the reporting period.

The sale of Delo was temporarily halted in 2012 after we failed to receive any binding offer fulfilling the tender requirements. In light of the sales process of Večer we also continued the sales process for Delo. As part of the Laško Group restructuring process, the sale of Delo is being managed by the M&A advisers, namely UniCredit Banka Slovenija, which began sales efforts on 1 September 2013 by sending a teaser to potential buyers. An IM was sent in December to those who agreed to sign an NDA. The non-binding proposals

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arrived in March 2014. In light of the conclusion of the sales agreement for Večer we will also continue the sales process for Delo.

The sale of Radenska, Radenci began on 1 September 2013 according to the project of operational and financial restructuring of the Laško Group. In September, a teaser was sent to potential investors in Radenska, followed by an IM. In December, management pitches were organised for potential investors at Radenska's headquarters. In January and February 2014, due diligence reviews and negotiations with the investors that provided binding bids were underway. In 2014, one common binding bid was received from two bidders; negotiations are currently underway.

The sale of Jadranska pivovara – Split closed unsuccessfully in December 2012 as no party expressed its serious interest. In January 2013 we began selling off the remaining production equipment and the remaining assets of Jadranska pivovara. A sales agreement for the production equipment was concluded with a broker; some of the production was sold, with the proceeds being received by the end of May 2014.

In 2014, the Laško Group continues activities related to the divestment of assets not necessary for its operations, namely:  Pivovarna Laško: the Hum hotel in Laško, the "Tri lilije" sports hall in Laško and the warehouse at Letališka 32, Ljubljana. The warehouse was sold and the transaction closed in late December 2013,  Pivovarna Union: the "Center Bellevue" development and plots of land, and warehouses in Maribor,  Radenska: the commercial building in Radenci,  both breweries have also begun proceedings aimed at selling some of their holiday chalets. The Group will intensively continue all sales processes, and as a result, all divestment activities are continuing rapidly also in 2014.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

FINANCIAL RISK MANAGEMENT All the risk management activities in the Laško Group focus on the unpredictability and illiquidity of financial markets, that have increased under the conditions of the financial crisis, and attempt to minimize the potential negative effects on the financial stability and performance of the Group. The finance department predominantly deals with financial risks while the sales department is also involved in credit risk management. Long-term stability of the Group’s operations dictates concurrent and detailed monitoring and assessment of financial risks. In 2014, the Group continues to follow the objective of achieving stable operations and reducing exposure to individual risks to a sustainable level. The companies are unable to fully hedge all risks, but can reduce or avoid risks from materialising with timely measures. To this end, the companies continuously recognise and assess risks, taking the relevant measured depending on the target risk exposure. Risk management measures have been built into our day-to-day operations. All recognised risks have been recorded in the risks register, which is amended as needed. Particularly significant among financial risks faced by the Group are liquidity risk, risk related to the decrease in investment fair value, credit risk and to some extent also interest rate risk. The exposure to particular types of financial risks and measures for protection against them are implemented and evaluated based on the impacts on cash flows. The Group, and especially Pivovarna Laško, disclose an excess of current liabilities over current assets, signifying the existence of a significant liquidity risk in particular in the parent company. After activities spanning nearly a year, we managed to come to an agreement with the banks on the long-term financial restructuring of Pivovarna Laško, Pivovarna Union and Radenska until 2016, which also contains the significant milestones relating to the disposal of financial investments as part of the companies' restructuring. The Restructuring and Standstill Agreement up to 31 December 2016, which was signed on 30 April 2014, represents a significant reduction of the insolvency risk and a significant improvement of the structure of financing sources. By selling its investment in Mercator, which closed on 27 June 2014, the Group realised an important milestone in the restructuring process and significantly reduced its debt to banks. To avoid liquidity issues, Group companies manage their liquidity risk, design and implement a policy of regular liquidity management including the planning of cash outflows and sufficient inflows both on an annual and a monthly level.

Liquidity risk Monitoring of the fundamental financing and liquidity ratios pursuant to Article 14 of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act, which prescribes criteria under which an entity is deemed insolvent, is particularly important and necessary in ensuring effective liquidity risk management. Regular monitoring of an entity's liquidity position is of particular importance as it ensures

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

timely response and helps to avoid unfavourable consequences of an emerging liquidity crisis. Due to the signing of the Restructuring and Standstill Agreement and the successful divestment, the liquidity situation has improved; however, in view of the difficult situation on financial markets and the entire economic environment, the Group's exposure to liquidity risk is still very high and requires special attention.

The risk of changes in fair value The risk of changes in fair value of financial investments, property, plant and equipment and investment property is undoubtedly also an important financial risk. The risk can be observed in the segment of financial expenses where financial expenses from the impairment and write-offs are disclosed.

Credit risks include all those risks resulting in the decline of the company’s economic benefits due to insolvency of the company’s business partners (customers) and failure to meet their contractual obligations. To this end, the receivables from our business partners, wholesalers and retailers, are regularly monitored. In addition, we actively manage receivables, rapidly implement collection procedures by reminding customers, collecting receivables via telephone or in the field, as well as debt recovery through an external agent and through the courts. Part of our receivables are insured with the SID insurance company, while others are secured with guarantees, mortgages and bills of exchange. Business with less credit-worthy customers is made on the basis of advance payments and immediate payments so that the risk of non-payment for the purchased goods is avoided to some extent. Receivables due from our major wholesalers on the local market are only partly collateralised and subsequently, there is a large credit risk exposure to this particular segment. It is believed that there is a considerable risk of spreading late-payment culture also in 2014, which is the result of the financial crisis in all segments of the economy. The management believes that the credit risk is increasing due to fierce economic conditions.

Interest rate risk is the risk of a possible change in the reference interest rate on the financial market, mainly due to euro borrowings linked to a variable interest rate (EURIBOR). Interest rate hedging of long-term debt at variable interest rate is doubtlessly sensible; however, since our loans were restructured until 31 December 2016 on 30 April 2014, we will monitor events on the financial markets and act when appropriate. The management have assessed the Company's interest rate risk as rather high but manageable.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

SALES Sales, marketing and development in the Laško Group Sale In the first half of the year we have exceeded our high goals both in Slovenian and abroad, although we are still facing the very deteriorated economic situation in the region. A drop in purchasing power is reflected in greater inclination to saving and changes in purchasing habits, meaning customers are ever more cautious and prices are impacting purchasing decisions more and more. Changes in the consumption structure continue and reveal a growth in the discount supermarket segment and customer inclination towards supermarket brands. Payment indiscipline is on the rise; retailers are reducing the number of different products offered and are above all maintaining lower inventory levels, while more and more products are sold in various promotions. In the first six months of 2014, the Laško Group (Pivovarna Laško, Pivovarna Union, Radenska, Vital and Birra Peja) sold 1,958,238 hectolitres of all beverages, which is 5.2% more than in the first six months of 2013 and 0.9% above the plan. The growth of supermarket brands was noted in all beverage segments. Quantitative sales of beverages of the Laško Group I.-VI./2014

Index 2014/2013

Index 2014/dyn. plan

Index 2014/an. plan

Beer Water Non-alcoholic beverages

1,157,171 523,354 277,713

108.6 100.4 101.5

103.3 96.9 98.5

49.9 47.4 47.1

TOTAL

1,958,238

105.2

100.9

48.8

(in hl)

Marketing and development BEER Laško Development – in the first half of 2014, we redesigned the primary and secondary packaging used for the whole Laško brand. The redesign is aimed at unifying and refreshing the brand. The changes to the primary brand, Laško Zlatorog, are minor, while major changes were made to the Laško Club and Laško Malt brands. The redesigned packaging has been entering the market successively since April. A "Full of Pride" image campaign has been underway since May with respect to the Laško brand; this includes a complete media mix. Mini communication campaigns for the Laško Malt brand began in July, which was redesigned and a new flavour

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

(strawberry) introduced. Media communication for both brands was complemented with a social network competition. We activated the Laško Zlatorog brand for the football world cup in Brazil with the slogan "Viva Brazil", a special can, an on-line competition and retail and hospitality promotions. The campaign was conducted on the markets of Slovenia, Croatia, Bosnia and Herzegovina, Serbia and Hungary. The "Pivo in cvetje" festival is our main event, this year celebrating 50 years, and which will see over 100,000 people visit Laško. In the mountains, we are continuing the largest mountaineering project in Slovenia entitled "Gremo v hribe" ("Lets go to the mountains"). Tested sales promotions were conducted on our export markets. In May and June, Croatia and Bosnia and Herzegovina saw an image campaign on TV, printed media, on billboards and on-line. In June, a billboard and radio campaign began in Italy. A national competition was organised in Croatia.

Union In the first half of the year, all activities of Pivovarna Union were dedicated to celebrating the company's 150th anniversary: we launched a retro edition of beer (Union Triglav and Union Amber) on the market, while Union Ležak and Union Bok will be launched in the second half of the year. For our 150th anniversary, our traditional Union ale was filled in 4 different retro can designs. In April, we launched the redesigned range of Union beer on the market (ale, stout, non-alcoholic) and drafted a new bottle. At the same time as introducing the redesigned range of Union beers, we launched a new corporate TV and radio advertisement for Pivovarna Union, emphasising its 150th anniversary, and launched a series of print and citylight advertisements.

Unionfest, which took place on 6 and 7 June in Tivoli Park, was the main event of the year. This two-day event, which offered a myriad of music and entertainment, attracted around 10,000 people each day. We also activated viewers at home watching (live) the final "Raketa" programme from Tivoli Park, which saw us selecting the Golden Barmaid, who will help promote Pivovarna Union. In March, the non-alcoholic Radler beer was redesigned and a new flavour (apricot) was offered both in a bottle and in a can.

NON-ALCOHOLIC BEVERAGES Sola In the past, the Sola (Multisola) brand successfully cooperated with stand up comedians. Thus in early 2014 we organised Sola hospitality promotions with a wellknown Slovenian stand up comedian. Together with Rdeči noski, in February we organised a socially-responsible project entitled "Mala pozornost za male junake" for the Sola umbrella brand. In mid-April, we launched a new fruit juice drink called Sola Hey (orange and lemon flavour) on the Slovenian market, thus widening the range of Sola fruit juice drinks. At the end of May, the "Sola Beats" activity was organised for

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

Sola iced teas. This activity was supported by a smaller advertising campaign on billboards and FB, as well as by a competition.

Ora This year, the Ora brand and labels have been redesigned. All communications (TV advertising, print advertisements, outdoor - Supreme, bus) were focused on the new flavour and introducing the new TO GO can under the "Preoblekla se je" and "Vse za novo Oro" slogans. A FB competition for the new can was also organised. Point of sales promotions of the new flavour will take place throughout the year (sampling with rewards for purchases, special exposure of pallets).

Pepsi The Pepsi labels were redesigned and a new can depicting footballers was introduced for the football world cup. In addition, outdoor advertisement in Ljubljana, on-line advertisement and a FB competition were organised.

WATER Radenska Classic TV advertisements (during winter sports and during the Olympic Games, during the "Skriti šef" programme on POP TV, during the football world cup on TV SLO, new print media advertising - Kapljica, Pljusk). We also organised regular and ad-hoc sales promotions at points of sale.

Radenska Naturelle TV advertising ("beauty comes from the depths"), co-branding with Ilirija, billboard advertisements, print media advertisements ("beauty comes from the depths"), on-line and social media advertisements, event promotions (junior size, billboards).

Oda During the Sochi Olympic Games we advertised Oda water on TV SLO (as the official water of the Olympic Team), and Pivovarna Laško as sponsor of the OCS. A competition was also organised during the Olympic Games for Oda water. In June we began a mini communications campaign for the Oda brand of spring water, which was complemented with a social media competition.

Zala Point of sales promotions were organised for the Zala brand as part of the whole product group and on the brand level. Zala sponsored certain sporting events. Regular on-line communications, advertising on giga billboards alongside motorways throughout the summer, and a short "Thirsty" billboard campaign were also organised.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

Flavoured water Za A large summer competition is currently being organised for the Za brand and summer activities entitled "ZA POLETJE"; this links on-line and traditional points of sales and was upgraded through social media communications.

Oaza Some print advertisements were ordered to promote the new summer flavour; events promotions and points of sales promotions (rewarding purchases and samplings) were organised.

SPONSORING In the first half of 2014, Pivovarna Laško continued to be one of the most important Slovenian sponsors of top sports and thus contributed its piece in the puzzle of the achievements of Slovene Olympians, sports teams and individual athletes at various competitions. In this period, Pivovarna Laško was actively involved in the successes of Maribor Football Club, which competed in the European Cup for the first time, in the Sochi Olympic Games, the successes of the Celje Pivovarna Laško Handball Club, which brought both crowns back to Celje, and numerous other projects.

AWARDS AND RECOGNITION Laško Group brands were extremely successful at this year's most prestigious independent quality competition, Monde Selection. Ten Pivovarna Laško and Pivovarna Union brands were awarded prestigious quality awards.

Sales of Laško Group products on the Slovenian market Sale Slovenian consumers are becoming ever more rational and ever less loyal to brands and particular retailers and hospitality providers. Pressure is mounting on producers to reduce their prices, a price war is being fought between retailers and hospitality providers, while the discounts offered to consumers in various forms are unsustainable in the long-term. In this year, we will continue to optimise points of sales in cooperation with selected retailers. Special focus is being placed on planograms, optimising the product range, communications with consumers, promotional activities, labelling, measuring and considering the behaviour of consumers in retail outlets. Brand management projects are also linked to beverage category development activities, such as: returnable packaging solutions, developing meal deals (beer - pizza, non-alcoholic beverages sandwich), updating and improving standards governing promotions (price labels, instructions for sales persons, labelling additional positions, etc.), thematic activities

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

(150 years of Union, the football world cup, water project, picnic packages: beer and meat, etc.), managing impulse coolers, etc. Our positioning standards are adapted to particular sales channels and customers as we aim to consistently manage beer, water and non-alcoholic beverage groups. We are focused on points of sale activities that aim to sustainably grow the profitability of our brands and products.

Retail market shares In this year, the quantities of beer sold grew by 1.8 percentage points (hereinafter: pp) on account of supermarket brands and more affordable foreign brands of beer (Nielsen, Panel trgovine, January - May 2014). Within the beer category, most growth was recorded by traditional ale, while the decline of beer mixes (Radlers) continued, falling by 18.7 pp. According to Nielsen, the following have the greatest share of the Slovenian market: Laško Zlatorog 25.1%, Union beer 23.6%, Laško Export Pils 6.2%, Union Radler 5.8% (Panel trgovine, May 2014). Retail sales of water grew by 1.2 pp. Growth was recorded in carbonated and noncarbonated water, while the decline of sales of flavoured water continued (Nielsen, Panel trgovine, January - May 2014). The cumulative market share (quantitative, as at May 2014) of the Laško Group (Radenska, Pivovarna Union and Pivovarna Laško) stood at 48.3%. The decline in consumption of non-alcoholic beverages continued in the first half of the year. The absolute quantities sold in retail fell by 16.2% (fruit juice drinks) and 14.8% (iced teas) (Nielsen, Panel trgovine, January - May 2014). In the group of iced teas, the Sola brand still maintains its leading position (44.2%) (Panel trgovine, May 2014). Quantitative sales of beverages of the Laško Group in Slovenia (in hl) Beer Water Non-alcoholic beverages

TOTAL

I.-VI./2014

Index 2014/2013

Index 2014/dyn. plan

Index 2014/an. plan

633,419 421,720 180,767

102.1 101.5 96.0

101.9 100.0 96.3

49.6 49.2 48.7

1,235,907

101.0

100.4

49.3

Pivovarna Laško Sales of Pivovarna Laško on the domestic market grew by 4.5% compared to the same period of last year, and exceeded the plan by 5.7%. Beer was the most important segment, of which we sold 3.5% more than in the same period of 2013, which is 6.2% above the plan. Supermarket brands account for most growth.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

Pivovarna Union Sales of Pivovarna Union on the domestic market fell by 0.9% compared to the first six months of last year, and fell behind the plan by 1.6%. Beer sales were 1% above the same period of 2013, and 1.4% below the plan. A 14.3% rise in sales of spring waters and a 9.7% rise of supermarket brands of beer was recorded.

Radenska Sales of Radenska on the domestic market fell by 0.1% compared to the first six months of last year, and fell behind the plan by 0.1%. The most important segment is mineral water, where 0.2% growth was recorded compared to last year, which is still 1.2% behind the plan. The largest growth was recorded in sales of spring water, which were 8.6% above the plan.

Vital Sales of Vital on the domestic market grew by 5.7% compared to the first six months of last year, and fell behind the plan by 4.6%.

Sales of Laško Group products on foreign markets This year, the sales of the Laško Group on foreign markets were up 13.4% compared to the first six months of last year and up 1.6% on the plan, which is a good result since the sales plans on foreign markets for 2014 were set very ambitiously. The Group sold most beer on foreign markets - 17.6% more than last year and 5.1% more than planned. We sold 3.9% less water than last year and 14.0% less than planned. Sales of non-alcoholic beverages also grew by 13.5% compared to last year and 2.9% more than planned. Laško Group companies recorded the following structures of sales: 36% Pivovarna Union (259,333 hl), 32% Pivovarna Laško (233,343 hl), 12% Radenska (88,841 hl), 0.3% Vital (2,262 hl) and 19% Birra Peja (own products and licensed products: 138,554 hl). Birra Peja produces Laško Zlatorog beer under licence for the markets of Kosovo, Macedonia, Albania and Montenegro, as well as peach Sola iced tea for the markets of Kosovo and Macedonia. Laško Group recorded the following structure of sales on foreign markets: 28% Italy, 23% Kosovo, 20% Croatia, 11% Bosnia and Herzegovina, 5% Hungary, 3% Austria, 2% Albania, 1% Macedonia, 0.2% Montenegro and other markets 6.7%. Export sales are organised at the Group level, so that the heads of markets from individual members of the Laško Group cover individual markets for all Group companies, which contributed to streamlining of the organisation. Sales promotions and the launch of new products on foreign markets are performed in cooperation with the Group's marketing department.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

For the Croatian market, the Group has established its own company Laško Grupa, Zagreb, whose sales team helps promote sales of Laško Group products in Croatia. In addition, this company fills products in PET packaging for the markets of Croatia and Bosnia and Herzegovina. Also in Bosnia and Herzegovina the Group has its own company, Laško Grupa, Sarajevo, which coordinates activities with the importers and principals.

Pivovarna Laško The sales of Pivovarna Laško on foreign markets increased by 18.4% compared to the first six months of last year and were 3.7% above the plan. Beer is the most important sales segment, while malt drinks have a smaller share. Sales on the key markets of Bosnia and Herzegovina, Kosovo and Macedonia are up compared to last year and compared to the plan. On the key markets of Italy and Croatia, Pivovarna Laško has already exceeded last year's results, but has not yet achieved the plan. Sales in Macedonia fell compared to last year but exceeded the plan. However, on the key markets of Austria and Montenegro, sales have not exceeded last years' or the plan. Laško Group recorded the following structure of sales on foreign markets: 41.5% Croatia, 28.8% Italy, 16.2% Bosnia and Herzegovina, 3.0% Hungary, 2.7% Kosovo, 1.8% Austria, 0.4% Macedonia, 0.1% Montenegro and 5.5% other markets.

Pivovarna Union The sales of Pivovarna Union on foreign markets increased by 27.6% compared to the first six months of last year and were 10.9% above the plan. Compared to last year, beer sales have grown by 32.8% and are 10.4% above the plan, while non-alcoholic beverage sales have grown 15.8% and are 12.6% above the plan. The sales of water increased by 10.0% compared to last year but were by 14.1% lower that planned. Sales on the key markets of Italy, Croatia, Kosovo, Macedonia and Hungary grew compared to last year and are above the plan, while sales on the key markets of Bosnia and Herzegovina and Austria lag behind last year's figures and the plan.

Radenska The sales of Radenska on foreign markets fell by 6.4% compared to the first six months of last year and were 16.6% below the plan. The most important ranges sold are mineral water, followed by spring water, non-alcoholic beverages, flavoured water and flavoured mineral water. Sales on the key markets of Kosovo, Macedonia and Hungary grew compared to last year and exceeded the plan. Radenska exceeded last year's results on the key market of Italy, but is still behind the plan, while it is lagging behind last year's sales and the plan on the key markets of Croatia, Bosnia and Herzegovina and Austria.

Vital On foreign markets, Vital sells small amounts of syrups, which account for a 13% growth in sales compared to the same period last year, but are 11.3% below the plan.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

Birra Peja Birra Peja sold 0.7% less of its own brand and licensed products on the Kosovar and foreign markets compared to the sales in the first six months of last year, which is 3% less than planned. Sales of beer fell by 4.2% compared to the first six months of last year, and fell behind the plan by 0.7%. Sales of water grew by 12.7% compared to the same period of last year, and were 9.2% above the plan. In mid-2012, Birra Peja began producing and distributing a separate batch of Sola peach iced tea. In the first six months of 2014, sales of non-alcoholic beverages were up 9.7% compared to 2013 but 15.8% less than planed.

INVESTMENTS In the first six months of 2014 we continued some key projects such as encouraging returnable packaging, the energy refurbishment and the gradual refurbishment of production lines. Major investments in means of production concluded in Laško Group companies in the late 1990s, meaning that the companies have merely maintained the existing equipment over the past ten years. Considering the financial significance of investments into production equipment, which also result in savings in maintenance and energy costs as well as the environment, the long-term impact on these costs is even more pronounced. As such, diligent investment planning and their correct appraisal in line with the full lifetime costs of the production equipment can result in the corresponding savings being more than doubled. The reduction of costs of spare parts and maintenance, which is a major feat considering the age of the production equipment, has resulted in the Laško Group achieving the point when we need to invest in new production equipment in order to stabilise conditions and ensure the safety of production. In today's modern business environment, where products and services are developed extremely rapidly, one of a company's significant competitive advantages can be its focus on final consumers, where state-of-the-art technology and development can allow us to acquire completely new consumers, who are interested in an optimum price performance, in addition to our existing loyal customers. Striving for the highest criteria in all operating processes is surely the best way to generate added value for our customers, owners and employees.

Investments in Pivovarna Laško The following investment projects were carried out and successfully finalised in the first half of 2014: In the first quarter, most emphasis in terms of investment projects was placed on the renovation of the dry part of the ST2 line, which began already in late 2013. Although the project was concluded in March 2014, the line will begin operating at full capacity

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

next year, when it will be complemented with new machinery in the wet part of the ST2 line. As the new part of the ST2 line comes on-line, we will be able to supply the market with more environmentally-friendly packaging, resulting in us purchasing 116,000 10 x 0.5 litre cases. In May, the World Packaging Organisation awarded us its highest recognition of excellence (World Star of Packaging) for this case. In April 2014 we concluded the renovation of the Kisters packaging machine, which now allows us to supply the market with new packaging formats in accordance with our marketing findings. In order to promote sales, we also purchased computer equipment and peripherals (coolers, pumps) in the first half of the year in accordance with our annual procurement plan. In June 2014 we obtained the utility permit for the SPTE 400 + 500 kWel facility. We began operating the 400 kWel facility in February 2014, and have already realised the relevant energy savings. The 500 kWel facility is expected to come on-line in the autumn, when the equipment for this unit to supply energy to the TP-PL2 tunnel pasteuriser will also be installed. Using the pilot device installed on the purifying plant, beer press residue degradation tests have continued since last year. The pilot project is now concluded and the results are very encouraging, as they show our substrate can be degraded up to 90%, resulting in us obtaining approximately 110 m3 of bio-gas from one tonne of substrate in the industrial reactor. From early 2014 we have been intensively collecting and drafting the technical and commercial documentation for the renovation of the wet part of the ST2 filing line. The designs have been drafted, bids obtained, we have inspected reference buildings and made an optimal selection of bidders for individual orders. The equipment is planned for supply in January 2015, while the completion of assembly and trial and regular run are expected in April 2015. A total of EUR 2,019,200 was spent in the first six months of 2014 on investment projects, while EUR 1,294,587 was spent on investments in the property, plant and equipment of the production and technical sector, the sales department and the IT department, representing 70% of the total funds earmarked for investments in 2014.

Investments in Pivovarna Union In the first half of 2014, Pivovarna Union spent EUR 3.2 million on investments and purchases of property, plant and equipment, which is 54.8% of the annual investment plan. In the first quarter we began implementing key investment projects relating to the renovation of the most important filling lines. In late June we concluded phase I of the renovation of the dry part of the S4 filling line, which will allow filling and packing

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

into the new "10" cases. The project has been completed and officially handed over. We are currently designing and collecting bids for the renovation of the wet part of the line. We also reconstructed the technological lines for beer during the fermentation process, which allows for additional flexibility of beer lines and tanks and allows us to clean cisterns. This will make transporting beer and beer mixes to plastic bottling lines easier and cheaper. Implementation of the MEPIS system for production monitoring has been concluded. The system is operational and the first data is available. The project will be officially handed over after the meeting between the group and the supplier. Minor deficiencies are currently being remedied and functioning optimised. We purchased a large number of half cases and bottles, which required that we reallocate assets earmarked for renovation of the PET bottling line. The value of these items of property, plant and equipment amounts to EUR 774,000. Some of the funds earmarked for investments were used for the purchase of returnable packaging and equipment used in sales promotion (casks, coolers, pumping devices, etc.). The project "Filter for Pall beer" was completed. The filter is operating as expected and meets all the required technical parameters. In early 2014 we organised the closing meeting with the supplier and officially took over the equipment. We replaced both pairs of rollers for fruit grinding in the beer production plant. We have initiated the Pivnica investment. We have acquired the building permit and concluded agreements with equipment suppliers and the providers of construction, electrotechnical and mechanical works. We have temporarily relocated the staff canteen. Until the kitchen can be used, food is supplied by an outside caterer.

Semi-annual investment report of Radenska In the first half of 2014, Radenska spent EUR 370,543 on investments, which is 25.8% of the annual investment plan. A part of this amount also relates to investments that were unfinished at the end of last year. In the same period, we spent EUR 182,888 on investments and purchases of property, plan and equipment, which is 26.2% of the budget. Most of the funds, EUR 279,605, were spent on preparatory, construction and installation works relating to the blowing and filling block on the Sidel-2 line. In operative terms, most of the project has been completed, although we are still waiting for many of the invoices relating to this project. We refurbished the floor in the warehousing and production facilities and repaired damage to the production facilities for the sum of EUR 28,578.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

The purchase of an electric 4.5 tonne forklift costing EUR 51,845, which had been planned for last year, is one of the major purchases. We spent EUR 76,497 or 73.8% of the budget on coolers for the market. Implementation of the MEPIS production monitoring system is currently in the closing stages. The system is already on-line. EUR 12,079 was spent on this project in the period. The project will be officially handed over after adjustments are made within the Laško Group and with the supplier. The remaining funds were spent on the several years running project of rationalising energy costs and the Implementation of our own water supply at Turjanci project. A small amount of funds were spent on purchasing small items of property, plant and equipment (due to obsolescence or unforeseen malfunction). Radenska thus spent EUR 553,432 or 25.9% of the plan on investments and purchasing property, plant and equipment in the first half of 2014. A total of EUR 195,565 was expected to be spent on returnable packaging in 2014. Considering market needs we were forced to overspend as the amount is actually EUR 246,825, which is 26.2% above the annual plan. The overspending mainly relates to the purchases of 0.5 litre bottles. In the second half of 2014 we expect to spend more on investments and purchases of items of property, plant and equipment in line with the annual plan.

EMPLOYEES As at 30 June 2014, the Laško Group employed 1,645 employees, up 7 from the year before. Of that, 996 employees are engaged in the core activity of producing beverages in Slovenia. Number of employees in the Laško Group companies as at 30 June 2014 (company) Pivovarna Laško, d. d. Pivovarna Union, d. d., Ljubljana Radenska, d. d., Radenci Vital Mestinje, d. o. o. Jadranska pivovara - Split, d. d. Laško Grupa, d. o. o., Hrvatska Birra Peja, Peć, Kosovo Birra Peja, Sh. p. k., Albania Delo Group Total

30 June 2014

30 June 2013

Difference

359 397 205 35 11 35 207 1 395 1,645

347 388 210 34 11 32 207 1 408 1,638

12 9 -5 1 3 -13 7

Note: since 1 January 2014, 24 top managers (12 from Pivovarna Laško and twelve from Pivovarna Union) are employed part-time by both companies.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

Although the Birra Peja Group was sold in late June 2014, it is included in the headcount figures for the first six months of 2014.

New employments also include employments for a definite period of time due to the high season. Employments were terminated on account of retirement, consensual termination and redundancy. Due to the part-time employment of the Chairman and Members of the Management Board of Pivovarna Laško and Pivovarna Union, who are all employed part-time in each of the companies, as of 1 January 2014 the same system has been implemented for management employees with special powers and responsibilities working for Pivovarna Laško and Pivovarna Union, with the exception of technical directors that remain at their primary locations. Thus management employees have taken powers and responsibilities for their relevant areas in both companies. Educational structure of employees in the Laško Group as at 30 June 2014 (level of education) II. III. IV. V. VI./1. VI./2. VII. VIII./1. VIII./2. Total

primary school lower vocational school middle vocational school grammar school, technical secondary, general and other school college technical college university graduate degree, postcollege specialisation master of science, postgraduate specialisation doctor of science

(level of education) II. III. IV. V. VI./1. VI./2. VII. VIII./1. VIII./2. Total

Pivovarna Laško

Pivovarna Union

Radenska

Vital

L. Grupa Hrvatska

Jadranska pivovara

44 22 80 93

49 9 92 136

38 53 68

10 10 8

30 -

2 4

42 22 46

32 22 48

17 6 21

2 5 -

1 4

5 -

1 359

1 397

205

Total

Birra Peja Kosovo

Delo Group

Birra Peja Albania

Laško Group

Group (in %)

141 31 267 309

33 53 87

17 1 36 130

1 -

158 65 357 526

9.6 4.0 21.7 32.0

99 55 119

7 22 -

27 60 101

133 137 220

8.1 8.3 13.4

2.3

2 1,042

3 207

6 395

11 1,645

0.7 100.0

In the Laško Group, the number of employees with primary and lower secondary education has fallen, while the number of employees with secondary education or

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Business report

higher has increased, mainly on account of on-the-work training and as a reflection of the higher educational structure of new hires.

Employee satisfaction and human resources development The Laško Group is aware that employee satisfaction is an important factor of our success. Thus we provide our employees with targeted training and ensure their workplace safety and satisfaction. As part of the Beverage production competencies centre, established by Pivovarna Laško, Pivovarna Union, Radenska and Vital in 2012 together with some other partners from the industry, the Laško Group has organised 109 training sessions to date, which included 1,011 employees. The aim of such training is to enhance employee competencies in certain areas, increase the competitive advantages of companies in the beverage industry, introduce new employee development processes and to exchange internal experience and best business practices. Laško Group employees are also subject to additional benefits such as voluntary pension insurance payments and the ability to cheaply rent holiday chalets at the seaside, in the mountains or at thermal spas,

Employee rewards system On 1 January 2014 we began implementing a new system of variable employee rewards, as anticipated by the Entrepreneurial Collective Agreements of Pivovarna Laško, Pivovarna Union and Radenska. The 2014 Business Plan defines the criteria used to define the funds earmarked for bonuses.

Safety and health at work All our employees are regularly made aware of the importance of safe and healthy working conditions and are also provided such conditions. Before beginning their employment, all new employees are tested for their practical workplace health and safety as well as fire safety skills. Employees are regularly provided the protective equipment and devices defined in the relevant workplace risk assessment. Regular inspections of work equipment, supervision over the use of work and protective clothing, and warning of workplace dangers all have an important role in limiting the number of work accidents. Employees regularly take medical check-ups. In each department, some employees have been trained in first aid.

Laško Group and Pivovarna Laško

Semi--annual reporrt 2014 / Finan ncial report – Laško Group p

FIN NANCIA AL REPO ORT STA ATEMEN NT OF CO OMPLIA ANCE The Managemeent Board of o Pivovarn na Laško declares that the finan ncial statem ments of Pivovvarna Lašk ko as well as a the conssolidated fin nancial statements off the Laško o Group for th he period ended e 30 Ju une 2014 giive a fair prresentation of the finaancial positiion and the results of operations of Pivovvarna Lašk ko and the e Laško G Group. Thee same unting pollicies were applied too the financial statem ments for th he Januaryy - June accou 2014 4 period as in drafting g the finan ncial statem ments of Pivvovarna Lašško and the Laško Grou up for 2013. nancial statements draafted for th he six montths ended 330 June 20 014 have The interim fin been n drafted in n accordancce with IAS S 34 - Interrim Financial Reportin ng, and should be read in conjuncction with the t annual financial statements s drafted forr the financcial year endeed 31 Decem mber 2013. The Managemeent Board is i responsibble for the implementtation of m measures to ensure the m maintenancce of the value v of thee assets of Pivovarna Laško andd the Laško o Group and ffor the prevvention and d detection of fraud an nd other irrregularitiess. Laškko, 30 July 2014 2 mag. Dušaan Zorko

President of the Mannagement Board B Marjeta Ze evnik

Member of o the Manaagement Board Bo Mirjam Hočevar

Member of o the Manaagement Board Bo Gorazd Lu ukman

Member of o the Manaagement Board Bo Matej Ose et

Member of o the Manaagement Board Bo

Laško o Group and Pivovarna P Lašško

Semi-annual report 2014 / Financial report – Laško Group

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE LAŠKO GROUP for the period ended 30 June 2014 Consolidated statement of financial position STATEMENT OF FINANCIAL POSITION as at 30 June 2014

(in EUR)

Group at 30 June 2014

Group at 31 December 2013

268,892,906 71,480,610 155,093,775 5,846,981 427,413 1,232,967 2,361,869 518,013 2,195,416 29,735,862

284,057,058 72,409,028 170,065,814 5,847,085 427,413 1,207,647 283,544 287,276 2,196,510 31,332,741

142,684,472 8,341,306 24,011,624 73,205,594 3,593,358 25,368,150 8,164,440 1,538,424 144,222,896 413,115,802

169,578,146 9,208,603 21,918,999 52,960,981 351,495 75,658,238 6,475,107 3,004,723 856,090 170,434,236 454,491,294

EQUITY EQUITY OF THE OWNERS OF THE CONTROLLING STAKE Share capital Share premium Profit reserves Revaluation reserve Retained earnings Net profit or loss Translation reserve EQUITY OF THE OWNERS OF NON-CONTROLLING STAKE TOTAL CAPITAL

55,489,821 36,503,305 2,566,995 3,650,331 5,486,530 (21,002) 7,283,522 20,140 10,590,320 66,080,141

48,409,602 36,503,305 30,993,977 3,650,331 5,701,570 (72,940) (28,354,042) (12,599) 9,804,281 58,213,883

LIABILITIES PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED INCOME Provisions for retirement grants and jubilee awards Other provisions Long-term accrued costs and deferred revenue

13,710,341 5,226,372 8,419,039 64,930

13,929,628 5,293,279 8,587,422 48,927

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

Consolidated statement of financial position (continuation) STATEMENT OF FINANCIAL POSITION

(in EUR)

as at 30 June 2014

Group at 30 June 2014

Group at 31 December 2013

LONG-TERM LIABILITIES Long-term financial liabilities SHORT-TERM LIABILITIES Liabilities for non-current assets held for sale Short-term operating liabilities Short-term financial liabilities SHORT-TERM ACCRUED COSTS AND DEFERRED INCOME TOTAL SHORT-TERM LIABILITIES

120,997,159 120,997,159 205,232,745 463,907 58,894,506 145,874,332 7,095,416 212,328,161

17,225,540 17,225,540 358,968,014 1,090,807 40,130,797 317,746,410 6,154,229 365,122,243

TOTAL EQUITY AND LIABILITIES

413,115,802

454,491,294

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

Consolidated profit or loss account INCOME STATEMENT for the period from 1 January to 30 June 2014

(in EUR)

Group 1 January to 30 June 2014

Group 1 January to 30 June 2013

Net sales revenues Change in inventories of products and work in progress Other operating revenue Operating revenue from investment disposal Costs of goods, materials and services Employee benefit costs Amortisation of intangible assets and depreciation of property, plant and equipment Revaluation operating expense Other operating expenses OPERATING PROFIT OR LOSS

130,515,275 2,385,783 1,089,743 804,407 (82,948,662) (24,002,227)

129,597,964 3,069,336 2,120,386 (83,765,955) (24,079,797)

(8,027,616) (739,536) (3,019,222) 16,057,945

(8,877,033) (667,153) (2,650,395) 14,747,353

Financial income Financial expenses NET FINANCIAL EXPENSES

3,078,963 (10,201,002) (7,122,039)

608,911 (17,831,684) (17,222,773)

8,935,906

(2,475,420)

(1,596,881) 7,339,025

192,340 (2,283,080)

60,116 7,278,909

(97,964) (2,185,116)

Total net profit / loss per share of the controlling interest Net profit/loss per share Diluted net profit/loss per share

0.8340 0.8340

(0.2504) (0.2504)

Total net profit / loss per share of the non-controlling interest Net profit/loss per share Diluted net profit/loss per share

0.0069 0.0069

(0.0112) (0.0112)

PROFIT OR LOSS BEFORE TAX Tax NET PROFIT OR LOSS FOR THE YEAR Share of non-controlling interests in net profit /loss Share of the controlling interests in net profit /loss

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

Consolidated statement of changes in equity STATEMENT OF CHANGES IN EQUITY- Group of related companies

(in EUR)

for the period from 1 January to 30 June 2014 Reserves for

Total capital of

Capital of

Legal

treasury

Treasury

Other profit

Retained

Net profit

Revaluation

Translation

capital

premium

reserves

earnings

or loss

reserve

interest

36,503,305

30,993,977

3,650,331

281,895

(281,895)

(72,940) (28,354,042)

5,701,570

(12,599)

48,409,602

9,804,281

58,213,883

Transactions with owners: Capital increase / reduction Other changes

(154,553)

(166,689) -

(166,689) (154,553)

(158,956) -

(325,645) (154,553)

Total transactions with owners

(154,553)

(166,689)

(321,242)

(158,956)

(480,198)

Changes in comprehensive income Net profit or loss for the year Fixed assets revaluation reserve

215,040

7,283,522 -

(215,040)

7,283,522 -

55,503 -

7,339,025 -

215,040

7,283,522

(215,040)

7,283,522

55,503

7,339,025

OPENING BALANCE at 1 January 2014 according to the IFRS

Total changes in comprehensive income from 1 Jan to 30 June 2014

controlling non-controlling

TOTAL EQUITY

Changes in equity Loss settlement Formation of reserves for treasury shares and interests Other

- (28,426,982)

72,940

28,354,042

154,553 -

(69,353)

32,739

154,553 (36,614)

889,491

154,553 852,877

Total movements in equity

- (28,426,982)

154,553

3,587

28,354,042

32,739

117,939

889,491

1,007,430

3,650,331

436,448

(21,002)

7,283,522

5,486,530

20,140

55,489,820

10,590,320

66,080,140

CLOSING BALANCE as at 30 June 2014

36,503,305

Laško Group and Pivovarna Laško

2,566,995

(436,448)

Semi-annual report 2014 / Financial report – Laško Group

Consolidated statement of changes in equity STATEMENT OF CHANGES IN EQUITY- Group of related companies

(in EUR)

for the period from 1 January to 30 June 2013 Reserves for

Total capital of

Capital of

Legal

treasury

Treasury

Other profit

Retained

Net profit

Revaluation

Translation

capital

premium

reserves

earnings

or loss

reserve

interest

36,503,305

66,744,172

3,650,331

341,170

(341,170)

875,016 (32,346,133)

9,655,319

11,637

85,093,647

7,571,555

92,665,202

Transactions with owners: Other changes

45,550

Total transactions with owners

45,550

Changes in comprehensive income Net profit or loss for the year Fixed assets revaluation reserve

(5,973)

4,458,785 -

5,973

4,458,785 -

(97,827) -

4,360,958 -

(5,973)

4,458,785

5,973

4,458,785

(97,827)

4,360,958

(875,016) 32,346,133

OPENING BALANCE at 1 January 2013 according to the IFRS

Total changes in comprehensive income from 1 Jan to 30 June 2013 Changes in equity Loss settlement Utilisation of reserves for treasury shares and interests Other

- (31,471,117)

(45,550) -

Total movements in equity

- (31,471,117)

(45,550)

3,650,331

295,620

CLOSING BALANCE as at 30 June 2013

36,503,305

Laško Group and Pivovarna Laško

35,273,055

(295,620)

191,319

controlling non-controlling

TOTAL EQUITY

(143,496)

(45,550) 47,823

(683,697) 32,346,133

(143,496)

2,273

9,517,796

11,637

89,600,255

7,473,728

97,073,983

185,346

4,458,785

Semi-annual report 2014 / Financial report – Laško Group

Consolidated statement of cash flows CASH FLOW STATEMENT for the period from 1 January to 30 June 2014

(in EUR)

Group

1 January to 30 June

2014

2013

16.057.945

14.747.353

Adjustments for: Elimination of revaluation operating expense Depreciation of PPE and investment property Amortisation of intangible assets Long-term assets written-off Short-term assets written-off Net movements in provisions

480.664 7.530.278 497.338 258.872 (219.288)

8.392.637 484.396 196.883 470.270 (109.955)

Total adjustments

8.547.864

9.434.231

(2.092.625) (21.063.969) 19.764.185

(4.183.828) (27.385.165) 26.376.683

Total movements in working capital

(3.392.409)

(5.192.310)

NET CASH FLOWS FROM OPERATING ACTIVITIES

21.213.400

18.989.274

CASH FLOWS FROM OPERATING ACTIVITIES Cash from operating activities Disbursements for taxes

21.213.400 -

18.989.274 (1.080.723)

OFFSETTING CASH FLOWS FROM OPERATING ACTIVITIES

21.213.400

17.908.551

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Acquisition / disposal of intangible assets Acquisition / disposal of financial assets - of that, net cash flows from the disposal of Birra Peja Interest income Dividends and capital profits received NET CASH FLOWS FROM INVESTING

6.961.201 431.080 54.884.535 2.033.431 129.917 62.406.733

(3.468.607) (119.118) 5.975.270 607.061 1.850 2.996.456

(10.201.002) (158.956) (68.100.459) (78.460.417)

(9.922.115) (93.979) (11.472.496) (21.488.590)

5.159.716 3.004.724 8.164.440

(583.583) 2.188.615 1.605.032

OPERATING PROFIT

MOVEMENTS IN WORKING CAPITAL Inventories and non-current assets held for sale Operating and other receivables Operating and other liabilities

CASH FLOWS FROM FINANCING ACTIVITY Interest paid Capital reduction Increase / decrease in financial debt NET CASH FLOWS FROM FINANCING NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

Consolidated segment reporting SEGMENT REPORTING - Group of related companies

(in EUR)

for the period from 1 January to 30 June 2014 Newspaper

Net sales by segments NET SALES REVENUES

Beer

Other beverages

Publishing Activity

Other

Total

79,401,127 79,401,127

27,750,216 27,750,216

22,347,718 22,347,718

1,016,214 1,016,214

130,515,275 130,515,275

Profit or loss from operations

16,057,945

Assets by segment Brands Goodwill

173,240,640 46,461,058 17,197,380

80,919,001 -

16,785,307 4,330,832 -

74,181,583 -

345,126,531 50,791,890 17,197,380

Liabilities by segment

191,653,971

42,317,593

47,692,672

65,371,425

347,035,661

4,901,502

2,046,250

935,874

143,990

8,027,616

Amortisation and depreciation

SEGMENT REPORTING - Group of related companies

(in EUR)

for the period from 1 January to 30 June 2013 Newspaper

Net sales by segments NET SALES REVENUES

Beer

Other beverages

Publishing Activity

Other

Total

77,479,276 77,479,276

28,833,047 28,833,047

22,132,167 22,132,167

1,153,474 1,153,474

129,597,964 129,597,964

Profit or loss from operations

14,747,353

Assets by segment Brands Goodwill

197,655,514 46,460,507 17,197,380

78,255,605 -

35,601,766 10,226,010 -

148,428,970 -

459,941,855 56,686,517 17,197,380

Liabilities by segment

213,226,314

41,031,863

52,300,004

137,382,336

443,940,517

5,760,747

2,082,659

948,440

85,187

8,877,033

Amortisation and depreciation

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

Notes to the unaudited consolidated semi-annual financial statements 1. Accounting policies The same accounting policies were applied in 2014 as in previous years. The accounting policies are presented in detail in the Annual Report of the Laško Group for the 2013 financial year, which was published on SEOnet, the website of the Ljubljana Stock Exchange, on 30 April 2014. The consolidated financial statements drafted for the six months ended 30 June 2014 have not been audited and have been drafted in accordance with IAS 34 - Interim Financial Reporting, and should be read in conjunction with the annual financial statements drafted for the financial year ended 31 December 2013. Certain items of comparative data for the January - June 2013 period, published in this report, may differ from those published in last year's semi-annual report. These changes relate to the impairment of MELR shares, which were recognised directly in equity as a reduction of revaluation reserve in the first half of 2013, while the comparative data in this report disclose the impairment under the current operating profit or loss through financial expenses. The same applies to the relevant deferred taxes. The 2013 annual report contains adjustments of the financial statements of previous years, as disclosed in a special note of the annual report. For this reason, the semiannual financial statements for 2013 in this report have also been adjusted.

2. Notes to individual items of the income statement a) Operating profit or loss In the first half of 2014, net sales revenues amounted EUR 130.5 million, which is EUR 0.9 million or 0.7% more than in the same period of the previous year. On the domestic market, the Group generated EUR 111.3 million of net sales revenues, which is EUR 1.2 million or 1.1% less than in the same period of the previous year. Net sales revenues on foreign markets amounted EUR 19.2 million, which is EUR 2.1 million or 12.3% more than in the same period of the previous year. Revenues on foreign markets account for 17.7% of revenues, while the share in the same period of the previous year was 13.2%. In the period, the Laško Group realised 48.3% of the planned annual net sales revenues. The total operating revenues of the first half of the year are approximately the same as in the same period of 2013, and amount to EUR 134.8 million, representing 49.7% of the annual plan. The operating revenues of 2014 are boosted by the positive impact of the sale of the investment in Birra Peja shares of EUR 0.8 million. In the first half of 2014, operating expenses amount to EUR 118.7 million, down EUR 1.3 million or 1.1% on the first six months of 2013. The structure of operating expenses is similar to that of the same period of 2013. Costs of materials account for most operating expenses (40.8%), followed by costs of services (27.2%), labour costs Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

(20.2%), depreciation and amortisation (6.8%), other operating expenses (3.1%) and the historic cost of goods and materials sold (1.8%). Compared to the first half of 2013, costs of services, depreciation and amortisation and labour costs are down, while other operating expenses are up slightly. In the period, the Group recorded 48% of its annual operating expenses planned. In the first half of 2014 the Laško Group generated an EBIT of EUR 16.1 million, which is EUR 1.3 million up on the first half of 2013. Normalised EBIT, calculated from operating profit increased or decreased by the impact of one-off business events, amounts to EUR 16.8 million and is up EUR 1.2 million on the normalised EBIT recorded in the first half of 2013. In the first six months of 2014, the Laško Group generated EUR 24.1 million of EBITDA, up EUR 0.5 million on the same period of last year. The Group generated a normalised EBITDA of EUR 24.9 million, which is up EUR 0.4 million on the same period last year.

b) Financing profit or loss In the first six months of 2014, the Group generated a net financing loss of EUR 7.1 million, mainly on account of financial expenses for interest on bank loans. In the period in question, net financial expenses for interest amounted EUR 8.4 million, which is EUR 0.4 million less than in the first six months of 2013. Financial expenses of the first six months of 2014 include the costs of legal and financial advisers relating to the sale of financial investments and debt restructuring of EUR 1.8 million. In the first half of 2013, such costs were recorded as operating expenses. In the first half of 2014, the Group recognised financial revenue on the disposal of Poslovni sistem Mercator (MELR) shares as the difference between the sales value at the transaction date and the stock-market value as at 31 December 2013 of EUR 2.9 million.

c) Net profit or loss In the first six months of 2014, the Group recorded a net profit of EUR 7.3 million. The normalised EBIT of the period amounts to EUR 6.5 million, up EUR 0.8 million on the same period in 2013.

3. Notes to individual items of the statement of financial position The consolidated statement of financial position as at 30 June 2014 does not contain the net assets of the Birra Peja due to the latter's sale.

a) Intangible assets Intangible assets as at 30 June 2014 amount to EUR 71.5 million and include the value of Pivovarna Union brands (EUR 46.5 million), the value of goodwill relating to the investment in Pivovarna Union (EUR 17.2 million) and the value of Delo Group brands (EUR 4.3 million). The remaining EUR 3.5 million represent material rights, computer software, licences, etc. In the first six months of the year, the value of Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

intangible assets fell on account of amortisation of EUR 0.5 million and grew on account of new acquisitions of EUR 0.1 million. The value of the brands and goodwill relating to the investment in Pivovarna Union and Delo were not appraised as at 30 June 2014 as no signs of impairment exist.

b) Property, plant and equipment The balance of property, plant and equipment of EUR 155.1 million as at 30 June 2014 was down by EUR 15 million, mainly on account of the elimination of the Birra Peja Group from consolidation. In the first six months of the year, the value of property, plant and equipment fell on account of depreciation of EUR 7.5 million and grew on account of new acquisitions of EUR 7.4 million. New acquisitions mainly refer to purchases of production equipment, packaging and marketing equipment.

c) Long-term available-for-sale financial assets Compared to 31 December 2013, the value of long-term available-for-sale financial assets did not decrease as at 30 June 2014 and amounts to EUR 1.2 million.

d) Long-term financial investments in the subsidiaries The long-term financial investments in subsidiaries include investments in unconsolidated subsidiaries. There was no change to the value of these investments compared to 2013 year-end.

e) Long-term financial investments into associated companies Long-term investments in the Group's associates include a holding in Thermana, Laško, and a holding in Slopak, Ljubljana. Both investments have been impaired in full in previous years, and therefore their value equals nil as at 30 June 2014. These investments were not appraised as at 30 June 2014.

f) Long-term loans granted As at 30 June 2014, long-term loans granted amount to EUR 2.4 million. The balance of loans is up EUR 2.1 million in the first six months of 2014 on account of the transfer of some short-term deposits to long-term deposits in accordance with the Restructuring and Standstill Agreement.

g) Long-term deferred tax assets As at 30 June 2014, long-term deferred tax assets stand at EUR 29.7 million. Longterm deferred tax assets relate mainly to the impairment of financial assets and the tax loss, and in a smaller part also to the write-down of receivables, provisions and liabilities due to employees. Long-term deferred tax liabilities refer to the revaluation of property and brands. In the first six months of 2014, long-term deferred tax assets are down on account of the reversal of receivables due to the impairment of MELR shares and the shares of Birra Peja, and are up on account of new additions relating to the tax loss. The net reduction of long-term deferred tax assets amounts to EUR 1.6 million.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

h) Non-current assets held for sale Non-current assets held for sale include the financial investment in Večer of EUR 3.1 million and the net value of the assets of Jadranska pivovara - Split of EUR 5.2 million. Compared to the last day of 2013, the value of non-current assets held for sale is down EUR 0.9 million as a result of the sale of certain production equipment belonging to Jadranska pivovara.

i) Inventories As at 30 June 2014, inventories amount to EUR 24 million. Compared to the last day of 2013, their value is up EUR 2.1 million. As a result of the elimination of Birra Peja from the consolidation, the value of inventories fell by EUR 2.7 million. The increase of EUR 4.8 million is mainly the result of seasonality. Inventories of raw material and materials are up EUR 1 million, inventories of work in progress EUR 0.2 million, and inventories of products EUR 0.7 million, while the inventories of merchandise are at the same approximate level as at the end of last year.

j) Short-term operating receivables As at 30 June 2014, short-term operating receivables amount to EUR 73.2 million, up 26 million on 31 December 2013. This increase is mainly the result of seasonality, and in part also of prolonged payment terms and payment delays.

k) Short-term available-for-sale financial assets Over the first six months of 2014, available-for-sale short-term financial assets recorded a drop of EUR 72 million, mainly as a result of the sale of shares in Poslovni sistem Mercator (MELR). As a result of this sale, in June, the Group received the proceeds from Agrokor of EUR 75.6 million, which is EUR 3.5 million over the value of the shares as at 2013 year-end.

l) Short-term granted loans As at 30 June 2014, short-term granted loans including deposits granted amount to EUR 25.4 million, or EUR 18.9 million up on 2013 year-end. In the first half of 2014, their value grew on account of the proceeds from the sale of the investment in Birra Peja and, in part, also on account of the proceeds from the sale of MELR shares, which were temporarily placed with banks as deposits.

m) Equity of the owners of the controlling interest As at 30 June 2014, equity of the owners of the controlling interest amounts to EUR 55.5 million. Equity of the owners of the controlling interest represents 13.4% of the total equity and liabilities. Compared to 2013 year-end, the equity has increased by the value of the net profit of the year of EUR 7.3 million, and decreased on account of additional purchases of PULG and RARG shares from holders of the non-controlling interest of EUR 0.2 million.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

n) Equity of the owners of non-controlling interests As at 30 June 2014, the equity of the non-controlling interests amounts to EUR 10.6 million, representing 16% of all equity. Compared to 31 December 2013, it is up EUR 0.8 million. This increase is mainly the result of the final consolidation upon the sale of the company Birra Peja, Peć, Kosovo.

o) Liabilities As at 30 June 2014, the total liabilities of the Group amount to EUR 347 million, representing 84% of the total equity and liabilities. Financial liabilities of EUR 266.9 million represent 64.6% of the total equity and liabilities. Compared to the last day of 2013, the balance of financial liabilities decreased by EUR 68.1 million, while the balance of all liabilities decreased by EUR 49.2 million.

p) Provisions and long-term accrued costs and deferred income Compared to the last day of 2013, the balance of provisions as at 30 June 2014 amounts to EUR 13.7 million, reflecting no significant change. Provisions for termination benefits and jubilee awards amount to EUR 5.2 million; other provisions relating to the underpayment of water rates and contractual legal actions amount to EUR 8.4 million, while long-term accrued costs and deferred income amount to EUR 0.1 million.

r) Long-term financial liabilities In 2014, in accordance with the Restructuring and Standstill Agreement concluded between the crediting banks and certain Laško Group companies, certain short-term loans were restructured, resulting in a significant increase in long-term financial liabilities. The impact amounts to EUR 103.8 million. Long-term loans from banks are fully collateralised with shares, real estate, movable property and receivables pledged and guarantees.

s) Short-term operating liabilities As at 30 June 2014, short-term operating liabilities amount to EUR 58.9 million. Compared to the last day of the previous year, they are up EUR 18.8 million, mainly as the result of seasonality, and in part also on account of prolonged payment terms and payment delays.

t) Short-term financial liabilities In the first six months of 2014, short-term financial liabilities fell by EUR 171.9 million, partly as a result of loan restructuring, and partly as a result of deleveraging from the proceeds from selling MELR shares. As at 30 June 2014, short-term financial liabilities of the Group amount to EUR 145.9 million. Short-term financial liabilities due to banks are fully collateralised with shares, real estate, movable property and receivables pledged and guarantees.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Laško Group

u) Short-term accrued costs and deferred income As at 30 June 2014, short-term accrued costs and deferred income amounted to EUR 7.1 million, reflecting an increase by EUR 0.9 million compared to the last day of 2013.

v) Collateralisation of financial liabilities The loans raised with banks amounting to EUR 264.8 million as at 30 June 2014 are fully collateralised with liens on securities, mortgages, the pledge of movable property and receivables. The Group has collateralised its long-term and short-term financial liabilities with 4,399,803 RARG (Radenska) shares, 440,295 PULG (Pivovarna Union) shares, 667,444 DELR (Delo) shares, 270,648 EGKG (Elektro Gorenjska) shares, 1,922,321 EMAG (Elektra Maribor) shares and 645,003 ZDRL (Thermana) shares, the value of which amounted to EUR 228.3 million at 30 June 2014. The value of real estate and equipment pledged amounts to EUR 110.6 million, the value of pledged receivables EUR 20.9 million, the value of pledged inventories EUR 2 million and the value of Pivovarna Laško brands pledged EUR 50 million.

z) Excess short-term liabilities As at 30 June 2014, the Group's total short-term liabilities amounted to EUR 212.3 million, while its short-term assets amounted to EUR 144.2 million. The excess shortterm liabilities amount EUR 68 million, and will be settled in the future through the sale of assets and the increase of long-term equity and liabilities.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

UNAUDITED UNCONSOLIDATED FINANCIAL STATEMENTS OF PIVOVARNA LAŠKO for the period ended 30 June 2014 Unconsolidated statement of financial position STATEMENT OF FINANCIAL POSITION as at 30 June 2014

ASSETS NON-CURRENT ASSETS Intangible assets Property, plant and equipment Investment property Long-term investments in the subsidiaries Financial assets available for sale Long-term loans Long-term financial lease receivables Long-term deferred tax assets SHORT-TERM ASSETS LESS SHORT-TERM DEFERRED AND ACCRUED ITEMS Inventories Short-term operating receivables Financial assets available for sale Short-term loans Cash and cash equivalents SHORT-TERM ACCRUALS AND PREPAID EXPENDITURE TOTAL SHORT-TERM ASSETS TOTAL ASSETS EQUITY MAJORITY CAPITAL Share capital Share premium Profit reserves Revaluation reserve Retained earnings Net profit or loss for the year TOTAL CAPITAL LIABILITIES PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED INCOME Provisions for retirement grants and jubilee awards Other provisions Long-term accrued costs and deferred revenue LONG-TERM LIABILITIES Long-term financial liabilities SHORT-TERM LIABILITIES LESS SHORT-TERM ACCRUED AND DEFERRED ITEMS Short-term operating liabilities Short-term financial liabilities

Laško Group and Pivovarna Laško

(in EUR)

Controlling company 30 June 2014

Controlling company 31 December 2013

302,906,614 820,682 44,919,624 4,315,710 224,858,842 241,655 376 518,014 27,231,711

301,383,218 938,015 43,937,583 4,315,710 224,526,224 241,655 376 533,230 26,890,425

37,266,524 8,096,262 27,950,286 270,648 735,717 213,611 55,972 37,322,496 340,229,110

55,643,989 6,937,658 20,154,988 26,305,484 1,888,641 357,218 33,717 55,677,706 357,060,924

67,436,220 36,503,305 24,760,570 3,730,094 2,976,843 107,400 (641,992) 67,436,220

68,078,212 36,503,305 24,760,570 3,730,094 3,084,243 68,078,212

6,636,076 1,333,160 5,253,989 48,927 83,068,002 83,068,002

6,636,075 1,333,160 5,253,988 48,927 2,377,590 2,377,590

181,532,354 35,016,254 146,516,100

279,239,347 24,101,331 255,138,016

Semi-annual report 2014 / Financial report – Pivovarna Laško

Unconsolidated statement of financial position (continuation) STATEMENT OF FINANCIAL POSITION

(in EUR)

as at 30 June 2014

Controlling company 30 June 2014

Controlling company 31 December 2013

SHORT-TERM ACCRUED COSTS AND DEFERRED INCOME TOTAL SHORT-TERM LIABILITIES TOTAL EQUITY AND LIABILITIES

1,556,458 183,088,812 340,229,110

729,700 279,969,047 357,060,924

Unconsolidated income statement INCOME STATEMENT for the period from 1 January to 30 June 2014

(in EUR)

Controlling company 1 January to 30 June 2014

Controlling company 1 January to 30 June 2013

45,821,150 18,877 309,973 (31,920,902) (5,312,079)

43,497,126 786,246 453,618 (30,894,966) (5,054,462)

(2,220,450) (12,841) (1,168,400) 5,515,328

(2,324,856) (118,314) (538,015) 5,806,377

1,155,386 (7,653,992) (6,498,606)

55,828 (10,250,916) (10,195,088)

PROFIT OR LOSS BEFORE TAX

(983,278)

(4,388,711)

Tax NET PROFIT OR LOSS FOR THE YEAR

341,285 (641,993)

645,871 (3,742,840)

Share of the controlling interests in net profit /loss

(641,993)

(3,742,840)

(0.0734) (0.0734)

(0.4279) (0.4279)

Net sales revenues Change in inventories of products and work in progress Other operating revenue Costs of goods, materials and services Employee benefit costs Amortisation of intangible assets and depreciation of property, plant and equipment Write-downs Other operating expenses OPERATING PROFIT OR LOSS Financial income Financial expenses NET FINANCIAL EXPENSES

Total net profit / loss per share of the controlling Net profit/loss per share Diluted net profit/loss per share

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

Unconsolidated statement of changes in equity STATEMENT OF CHANGES IN EQUITY - Controlling company

(in EUR)

for the period from 1 January to 30 June 2014 Total

OPENING BALANCE at 1 January 2014 according to the IFRS

capital

premium

36,503,305

24,760,570

Legal

Reserves for

Treasury

Other profit

profit

Retained

Net profit

Revaluation

TOTAL

reserves treasury shares

reserves

earnings

or loss

surplus

EQUITY

3,730,094

3,084,243

68,078,212

3,650,331

79,763

Transactions with owners: Total transactions with owners

Changes in comprehensive income Net profit or loss for the year Fixed assets revaluation reserve

107,400

(641,992) -

(107,400)

(641,992) -

Total changes between 1 January and 30 June 2014

107,400

(641,992)

(107,400)

(641,992)

36,503,305

24,760,570

3,650,331

79,763

3,730,094

107,400

Changes in equity Total movements in equity CLOSING BALANCE as at 30 June 2014

Laško Group and Pivovarna Laško

(641,992)

2,976,843

67,436,220

Semi-annual report 2014 / Financial report – Pivovarna Laško

Unconsolidated statement of changes in equity STATEMENT OF CHANGES IN EQUITY - Controlling company

(in EUR)

for the period from 1 January to 30 June 2013 Total

OPENING BALANCE at 1 January 2013 according to the IFRS

capital

premium

36,503,305

52,087,131

Legal

Reserves for

Treasury

Other profit

profit

Retained

Net profit

Revaluation

TOTAL

reserves treasury shares

reserves

earnings

or loss

surplus

EQUITY

3,789,369

3,985,156

96,364,961

3,650,331

139,038

Transactions with owners: Total transactions with owners

Changes in comprehensive income Net profit or loss for the year Fixed assets revaluation reserve

116,369

(3,742,840) -

(116,369)

(3,742,840) -

Total changes between 1 January and 30 June 2013

116,369

(3,742,840)

(116,369)

(3,742,840)

36,503,305

52,087,131

3,650,331

139,038

3,789,369

116,369

Changes in equity Total movements in equity CLOSING BALANCE as at 30 June 2013

Laško Group and Pivovarna Laško

(3,742,840)

3,868,787

92,622,121

Semi-annual report 2014 / Financial report – Pivovarna Laško

Unconsolidated cash flow statement CASH FLOW STATEMENT for the period from 1 January to 30 June 2014

(in EUR)

Controlling

company

1 January to 30 June

2014

2013

5.515.328

5.806.377

2.103.117 117.333 1.498 11.344 2.233.292

2.208.204 116.652 67 118.247 2.443.170

MOVEMENTS IN WORKING CAPITAL Inventories and non-current assets held for sale Operating and other receivables Operating and other liabilities Total movements in working capital

(1.158.604) (7.813.682) 11.741.681 2.769.395

(423.938) (10.593.473) 11.002.097 (15.314)

NET CASH FLOWS FROM OPERATING ACTIVITIES

10.518.015

8.234.233

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Acquisition / disposal of financial assets Interest income NET CASH FLOWS FROM INVESTING

(3.086.656) 27.984.486 26.044 24.923.874

(1.280.864) 2.685.785 55.828 1.460.749

(7.653.992) (27.931.504) (35.585.496)

(6.506.234) (3.215.949) (9.722.183)

(143.607) 357.218 213.611

(27.201) 295.464 268.263

OPERATING PROFIT Adjustments for: Depreciation of PPE and investment property Amortisation of intangible assets Long-term assets written-off Short-term assets written-off Total adjustments

CASH FLOWS FROM FINANCING ACTIVITY Interest paid Increase / decrease in financial debt NET CASH FLOWS FROM FINANCING NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

Notes to the unaudited unconsolidated semi-annual financial statements 1. Accounting policies The same accounting policies were applied in 2014 as in previous years. The accounting policies are presented in detail in the Annual Report of the Laško Group for the 2013 financial year, which was published on SEOnet, the website of the Ljubljana Stock Exchange, on 30 April 2014. The separate financial statements drafted for the six months ended 30 June 2014 have not been audited and have been drafted in accordance with IAS 34 - Interim Financial Reporting, and should be read in conjunction with the annual financial statements drafted for the financial year ended 31 December 2013. Certain items of comparative data for the January - June 2013 period, published in this report, may differ from those published in last year's semi-annual report. These changes relate to the impairment of MELR shares, which were recognised directly in equity as a reduction of revaluation reserve in the first half of 2013, while the comparative data in this report disclose the impairment under the current operating profit or loss through financial expenses. The same applies to the relevant deferred taxes. The 2013 annual report contains adjustments of the financial statements of previous years, as disclosed in a special note of the annual report. For this reason, the semiannual financial statements for 2013 in this report have also been adjusted.

2. Quantities sold and achieving the planned goals In the first half of the year, the sales of Pivovarna Laško equalled 545,167 hl of all beverages, which is 49,572 hl or 10.0% more than in the same period of 2013. Considering the plan for the period in question, in beer sales, Pivovarna Laško exceeded the plan by 5.0%; in natural drinking water sales, it achieved 97.8% of the plan while sales of non-alcoholic beverages exceeded the planned quantities by 14.4%.

3. Notes to individual items of the income statement a) Net sales revenues In the first six months of 2014, Pivovarna Laško sold 10% more products in terms of quantities sold and generated EUR 45.8 million of net sales revenues, which is up EUR 2.3 million or 5.3% on the same period of last year. The revenues generated are up 4.7% on the revenues planned for the period in question. In addition, the revenues generated represent 50.8% of the annual revenues planned. Despite quantitative sales being up 4.5%, net revenues from the sale of products and services on the domestic market of EUR 27.1 million are comparable to those generated in the same period of last year, while net sales revenues on foreign markets are up EUR 1.8 million (22.4%) at EUR 9.6 million, with quantities up 18.4%. In the first half of 2014, the share of net sales revenues generated on export markets stood at 26.2%, which is 3.7% more than Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

in the same period of the previous year. The dynamic plan of revenues for the January to June period has been exceeded by 3.9% on the domestic market and by 5.8% on export markets. Compared to the annual plan of revenues, the revenues generated on the domestic market stand at 49.4%, and the revenues generated on export markets at 53.1%. The net revenues from sales of merchandise and materials amount to EUR 9.1 million, up 6.5% on the same period of last year. Compared to the annual plan of revenues for the first half of the year, the revenues generated are up 5.3%, while the revenues generated stand at 52.1% of the annual plan. In the period in question, Pivovarna Laško generated a total of EUR 46.2 million of operating expenses, 3.2% more than in the same period of last year. The Company has exceeded the plan by 5% and generated 50.9% of the revenue planned for 2014 in the period in question.

b) Costs and other operating expenses The costs and other operating expenses of Pivovarna Laško during the January - June 2014 period amount to EUR 40.6 million, 4.4% or 1.7 million more than in the same period of 2013. The expenses recorded in this period represent 50.4% of the annual plan. Slightly more than a third of these operating expenses are costs of materials totalling EUR 13.9 million, which is 4.3% more than in the same period of last year. The costs of materials recorded in this period represent 52.1% of the annual plan. Costs of raw materials and materials grew by EUR 0.8 million or 6.7%, outstripping the growth of revenue mainly due to increased production. Costs of energy resources of EUR 1.1 million dropped by 19.6% or EUR 0.3 million due to lower prices, despite increased production compared to the previous year. Costs of services amount to EUR 9 million and are up EUR 0.1 million or 1.3%, standing at 46.4% of the annual costs of services planned. Marketing costs recorded the highest growth. Labour costs of EUR 5.3 million are up EUR 0.3 million or 5%, mainly due to redundancy payments which did not occur in the same period of 2013. The depreciation and amortisation costs decreased by EUR 0.2 million or 8.6% compared to the same period last year as a consequence of the low investment activity in recent years and consequently an amount of fixed assets that were already written-off.

c) Operating profit or loss In the first half of 2014, the operating profit amounts to EUR 5.5 million, down EUR 0.3 million or 5% on the same period of last year. In the first six months of 2014, the Company recognised certain one-off events that have an overall negative effect. The normalised EBIT adjusted by EUR 0.3 million of the effects of these business events amounts to EUR 5.8 million, which is a decrease of EUR 0.8 million compared to 2013.

d) Financing profit or loss In the first six months of 2014, the Company generated a financing loss of EUR 6.5 million, which is EUR 1 million over the operating profit. Compared to the same period of last year, financial revenues are up EUR 1 million as a result of the reversal of the impairment of MELR shares. Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

Financial expenses in the period amount to EUR 7.7 million. In the first six months of 2014, the Company recorded EUR 5.3 million of interest on bank loans, which is comparable to the same period of last year, while interest expenses on loans from related persons amounted to EUR 1.1 million and restructuring costs amounted to EUR 1.2 million.

e) Net profit or loss In the first half of 2014 the Company generated a net loss of EUR 1 million, while the net loss of the same period of last year was EUR 4.4 million. As a result, in the first six months of 2014 the Company incurred a net loss amounting to EUR 0.6 million. In the first six months of 2014, the Company recognised certain one-off events, such as the positive accounting impact of the sale of MELR shares as the difference between their sales and carrying value as at 31 December 2013 of EUR 1.1 million. The normalised EBIT adjusted by EUR 0.1 million of the effects of these business events amounts to EUR - 0.5 million.

f) Cash flows from operating activities (EBITDA) In the first six months of the year, the Company generated an EBITDA of EUR 7.7 million, down EUR 0.4 million or 4.9% on the same period of last year. The normalised EBITDA amounts to EUR 8.1 million and is down EUR 0.9 million on the previous year.

4. Notes to individual items of the statement of financial position a) Assets At 30 June 2014, the Company's assets amounted to EUR 340.2 million, which is a decrease of EUR 16.8 million compared to 2013 year-end.

b) Property, plant and equipment Compared to the last day of 2013, property, plant and equipment amounted to EUR 44.9 million as at 30 June 2014, reflecting depreciation and amortisation of EUR 2.2 million, disposals of EUR 0.2 million and new acquisitions of EUR 3.4 million.

c) Long-term financial investments As at 30 June 2014, long-term investments totalled EUR 225.6 million. Compared to the last day of the previous year, there was no significant change. As at 30 June 2014, investments in the subsidiaries were not tested for impairment.

d) Long-term deferred tax assets As of 30 June 2014, the Company disclosed net long-term deferred tax assets amounting to EUR 27.2 million. Compared to the end of 2013, there were no significant changes in long-term deferred tax assets.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

e) Inventories The value of inventories grew by EUR 1.2 million compared to the end of the previous year, mainly on account of inventories of raw materials.

f) Short-term trade receivables Compared to 31 December 2013, short-term trade receivables, which amount to EUR 27.9 million as at 30 June 2014, are up EUR 7.8 million, which is the result of settlement delays, as well as the seasonal effect.

g) Short-term granted loans In the first half of 2014, short-term loans granted amounted to EUR 0.7 million, falling by EUR 1.2 million compared to 31 December 2013. They fell due to the reversal of bank deposits.

h) Equity As at 30 June 2014, equity amounts to EUR 67.4 million, reflecting a reduction of EUR 0.6 million compared to the last day of 2013 on account of the loss generated in the first half of the year.

i) Long-term financial liabilities As at 30 June 2014, long-term financial liabilities of the Company amount to EUR 83.1 million, of which EUR 73.7 million relates to long-term loans from banks, and EUR 9.3 million to liabilities for long-term loans raised from subsidiaries. Compared to the last day of 2013, the balance of long-term financial liabilities increased by EUR 80.7 million due to the restructuring of short-term into long-term loans.

j) Short-term operating liabilities Compared to the 2013 year-end, short-term operating liabilities as at 30 June 2014 of EUR 35 million increased by EUR 10.9 million due to the seasonal effect, prolonged payment terms, payment delays and increased liabilities due to the state relating to excise duties.

k) Short-term financial liabilities As at 30 June 2014, short-term financial liabilities amount to EUR 146.5 million, of which EUR 112.1 million relates to liabilities from short-term loans, EUR 33.1 million relates to short-term loans raised from subsidiaries, while the difference relates to interest and other short-term financial liabilities.

l) Collateralisation of financial liabilities The financial liabilities of the Company relating to loans raised with banks amount to EUR 185.8 million as at 30 June 2014, and are fully collateralised with liens on securities, mortgages, the pledge of movable property and receivables. The Company has collateralised its financial liabilities with 4,745,107 RARG (Radenska) shares, 440,295 PULG (Pivovarna Union) shares, 539,516 DELR (Delo) shares, 270,648 Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

EGKG (Elektro Gorenjska) shares and 645,003 ZDRL (Thermana) shares. Loans raised from subsidiaries of EUR 42.4 million are collateralised with bills of exchange.

m) Excess short-term liabilities As at 30 June 2014, the Company's total short-term liabilities amount to EUR 183.1 million, while its short-term assets amount to EUR 37.2 million. The excess shortterm liabilities amount to EUR 145.9 million, down EUR 78.5 million compared to the last day of 2013. Due to this high excess of short-term liabilities, the Company is exposed to significant liquidity risk. On 30 April 2014, the Company concluded with all eighteen crediting banks a Restructuring and Standstill Agreement, which defines important financial restructuring milestones, whereas final maturity of the majority of the Company's borrowings has been rescheduled to the end of 2016. The Agreement regulates all commitments to creditors until the end of 2016. One of the key milestones for all stakeholders is the capital increase of Pivovarna Laško. After a transparent process of finding the investor, the capital increase will be discussed by the owners at the General Meeting of Pivovarna Laško. The first key milestone was the repayment of loans from the proceeds of the sale of the investment in Mercator, which has been successfully completed; the second is the repayment of loans from the proceeds from the disposal of non-strategic investments planned for the end of the year, while the third is the deleveraging and capital increase in mid-2015.

n) Potential liabilities Settlement claims of Pivovarna Union and Radenska in accordance with Article 542 of the Companies Act (ZGD-1) Between 6 February 2012 and 26 April 2012, Pivovarna Laško as the controlling entity comprised a so-called contractual group with its subsidiaries Radenska and Pivovarna Union pursuant to the relevant controlling agreement. In accordance with paragraph 1 of Article 539 of the Companies Act, on 26 April 2012, Pivovarna Laško sent written notice of termination of the Control Agreement as this was the fundamental condition one of the banks required Pivovarna Laško, Pivovarna Union and Radenska to fulfil in order for their financial liabilities to be rescheduled. Due to this, Pivovarna Laško will have to settle any losses generated by the two subsidiaries during this period in accordance with Article 542 of the Companies Act. On 23 April 2014, Pivovarna Laško received the letters entitled "Settlement claim pursuant to paragraph 1 of Article 542 of the Companies Act", both dated 22 April 2014 and sent by Pivovarna Union and Radenska. In the letters, the aforementioned companies inform Pivovarna Laško of the unaudited amounts of their settlement claims aimed to cover the losses of both companies generated during the contractual group with Pivovarna Laško as the controlling entity. The unaudited amount of the claim of Pivovarna Union for the period from 11 April to 26 April 2012 amounts to EUR 0 (nil), while the unaudited amount of the claim of Radenska for the period from 6 February to 26 April 2012 amounts to EUR 1,044,183.99. An overview of the calculations was attached to the letters.

Laško Group and Pivovarna Laško

Semi-annual report 2014 / Financial report – Pivovarna Laško

On 23 April 2014, Pivovarna Laško replied to the letters of Pivovarna Union and Radenska, informing both companies that it has been informed of their claims. At the same time, both companies were requested to provide confirmation of the amounts by auditors. In light of the aforementioned, provisions of EUR 1,044,183.99 have been disclosed in the financial statements of Pivovarna Laško for the financial year ended 31 December 2013.

Laško Group and Pivovarna Laško

Pivovarna Laško, d. d., Trubarjeva 28, 3270 Laško, 27 August 2014